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The following was sent to me in an email by a friend:
CLEAR EXPLANATION OF TAX CUTS…
Sometimes politicians, journalists and others exclaim: “It’s just a tax cut
for the rich!” and it is just accepted to be fact, without questioning it.
But what does that really mean?
Just in case you are not completely clear on this issue, the following might
help. Let’s put tax cuts in terms everyone can understand.
Suppose that every day, ten men go out for beer and the bill for all ten
men comes to $100.
If they paid their bill the way we pay our taxes, it would go something like
this:
The first four men (the poorest) would pay nothing.
The fifth man would pay $1
The sixth man would pay $3
The seventh man would pay $7
The eighth man would pay $12
The ninth man would pay $18
The tenth man (the richest) would pay $59.
So, that’s what they decided to do.
The ten men drank in the bar every day and seemed quite happy with the
arrangement, until one day when the owner threw them a curve. The owner of
the bar said, “Since you are all such good customers, I’m going to reduce
the cost of your daily beer by $20. Drinks for the ten now cost just $80.
The group still wanted to pay their bill the way we pay our taxes so the
first four men were unaffected. They would still drink for free. But what
about the other six men-the paying customers? How could they divide the $20
windfall so that everyone would get his “fair share”?
They realized that $20 divided by six is $3.33. But if they subtracted that
from everybody’s share, then the fifth man and the sixth man would each end
up being paid to drink his beer. So, the bar owner suggested that it would
be fair to reduce each man’s bill by roughly the same amount, and he
proceeded to work out the amounts each should pay.
And so:
The fifth man, like the first four, now paid nothing (100% savings).
The sixth man now paid $2 instead of $3 (a 33% savings).
The seventh man now paid $5 instead of $7 (a 28% savings).
The eight man now paid $9 instead of $12 (a 25 % savings).
The ninth man now paid $14 instead of $18 ( a 22% savings).
The tenth man now paid $49 instead of $59 (a 16% savings).
Each of the six was better off than before. And the first four continued to
drink for free. But once outside the restaurant-bar, the men began to
compare their savings.
“I only got a dollar out of the $20,” declared the sixth man. He pointed to
the tenth man and said, “.but he got $10!”.
“Yeah, that’s right,” exclaimed the fifth man. “I only saved a dollar, too.
It’s unfair that he got ten times more than I did!”
“That’s true!!!” shouted the seventh man. “Why should he get $10 back when
I got only two? The wealthy get all the breaks!”
“Wait a minute,” yelled the first four men in unison. “We didn’t get
anything at all. The system exploits the poor!”
The nine men surrounded the tenth man and beat him up.
The next night the tenth man didn’t show up for drinks, so the nine men
satdown and had beers without him. But when it came time to pay the bill,
they discovered something important. They didn’t have enough money between
all of them for even half of the bill!
And that, boys and girls, journalists and college professors, democrats and
republicans, is how our tax system works. The people who pay the highest
taxes get the most benefit from a tax reduction. Tax them too much, attack
them for being wealthy, and they just may not show up anymore. In fact,
they might start drinking overseas where the atmosphere is somewhat
friendlier.
(Written by David R. Kamerschen, PhD, Professor of Economics, University of Georgia).
Here is my response to Mr. Kamerschen and his World of numbers and right wing disposition:
Oh, you didn’t hear the rest of this story…….
The 10th man owned a doughnut shop where the first five men bought a bunch of doughtnuts each day. The 6th through 9th men, were employees of the 10th man at the doughnut shop and were paid very little by that 10th man.
Men 1 through 5 weren’t as saavy with their savings and had very little money due in large part to the large sums of money they spent buying doughnuts from the 10th man who consistently rose his prices. Men 6 through 9 did not see raises from the 10th man as his employees, eventhough the 10th man raised the prices on his doughnuts and increased revenue at his doughnut shop at a good rate. In addition, the 10th man made his doughnuts smaller over time while asking for more money and also asked Men 6 through 9 to work longer hours to keep their jobs or he was going to replace them with other workers.
Before going out for beers the night in question, Men 1-9 all read in Forbes Magazine how Man #10 was on the Top 10 richest men in the country list and how his CEO salary with options had exploded from the year before. Man #10 was lauded by the writer for increasing the company’s bottom line by cutting cost like salary and increasing price per unit on doughnuts along with saving money on materials by using less dough to make smaller doughnuts.
Men 1 through 9 felt exploited by this because they were buying Man #10’s products and working for him but they were getting less and less from him. They overlooked it because, afterall, they were drinking buddies. However, after a night of drinks when better judgement can become distorted. Men 1 through 9 were sent over the edge when they learned that not only did this guy exploit them with his doughnut shop, he now gets to pocket even more money because the bar owner is giving him more money back on the bill. They thought, the least he could do, since they are buying all his products and working long hours to sell his products with diminishing benefits is give them back a litte more when it comes time sit down and have drinks.
So, angry because they can’t pay their bills at home, feed their children or put clothes on their backs plus they are now getting nothing back from the drinks bill being cut, they turned on Man #10 who seems unsympathetic to their plight despite the fact that Men 1 through 9 did a lot to get Man #10 to where he is now.
Man #10 moved out of the country, only to find out that people aren’t buying his doughnuts like the do in his native land. He returned back to this country, looked for another place to set up his doughnut shop but used his money to fight for relaxed gun control laws so he can protect himself from more men like 1 through 9 because he intends to exploit them like he did the others. Meanwhile, the new 1 through 9 had to dodge bullets going to and from work because their neighborhoods are flooded with weapons due in large part to the relaxed gun control laws lobbied for by the rich Man #10 but hey, rich man #10 doesn’t care because he doesn’t live in their neighborhood, he just needs those people to make those doughnuts and buy those doughnuts so he can get the new Benz, that 12,000 sq foot mansion and helicopter that men 1 through 9 can view on the show on VH1 about Man #10.
And that boys and girls, Democrats and Republicans is how this country works. Keep letting the rich get richer off of the backs of the poor and watch the gap widen between the two. Suddenly the have nots get desperate and feel contempt for the haves who continue to exploit them. Soon we have a society where crime is of the essence. The rich can try it overseas but they most certainly will realize that the grass is not greener on that side and come back to the country where there is more money and people to exploit than anywhere else in the world.
Chad Wilson
Miramar, FL
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