Suppose that every day, ten men go out for beer and the bill for all ten 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 would pay $1.
The sixth would pay $3.
The seventh would pay $7.
The eighth would pay $12.
The ninth 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, the owner threw them a curve. ‘Since you are all such good customers,’ he said, ‘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 now paid $2 instead of $3 (33% savings).
The seventh now pay $5 instead of $7 (28% savings).
The eighth now paid $9 instead of $ 12 (25% savings). The ninth now paid $14 instead of $18 (22% savings).
The tenth now paid $49 instead of $59 (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, 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, ‘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!’
‘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 and beat him up. The next night the tenth man didn’t show up for drinks, so the nine sat down 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, ladies and gentlemen, journalists and college professors, 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.
Author Unknown
For those who understand, no explanation is needed. For those who do not understand, no explanation is possible.
The rich guy is only rich because of the 5 other guys (since the 5 other guys represent everybody with money)
The rich guy is only rich because of the 5 other guys (since the 5 other guys represent everybody with money)
And therefore what, the rich guy owes them something more than merely footing half the beer tab so everyone can drink (even the four guys who didn’t contribute anything)?
And what do you mean by sayings he’s only ‘rich because of the other guys’? The only way anyone gets rich is if they offer a service or a product other people will pay for. The more others will pay for that service/product, the richer that man/women will be. So are you saying the other 5 guys are customers/clients of the rich guy?
I thought this analogy was explaining the class system. Wealth comes at a price. Wealthy people still have way, way more money than everybody else, even after taxes, despite their “burden.” We should all be so lucky that they provide a service, and must bow down before their wishes or else they’ll leave? Rich people are rich because they have good workers who do a job job. I don’t know many people who get rich all on their own. This silly analogy posted (which is pretty old, I first read it over a year ago or so) just proves there is a class war. Go overseas, sure, but they may find the atmosphere to be the same after a while. Oh, it’s sooo hard being rich.
“And that, ladies and gentlemen, journalists and college professors, is how our tax system works.”
- This article is explaining the tax system.
If didn’t like or had a hard time understanding the overseas analogy, think of it this way, The rich man goes and drinks at another bar with new friends instead.
And yes, we should all be so lucky that rich people provide a service. The service they provide is investment which gives us our jobs. If I had a lot money, I can guarantee you I would put it in the bank, move to a tax favorable area, and never work again. Let someone else deal with the headache of profit and loss. Corporate America, see you later.
Brake,
The relationship between the employee and the employer is mutually beneficial -even if not equally beneficial (and if it was then the beer would never get paid). The worker needs a job so that he can pay his/her bills, and the employer needs a job done. Nothings keeping the worker from finding another job (or a few) elsewhere, anymore than theres something keeping the wealthy employer from closing up shop altogether and just living his/her life, thus skipping the whole hassle derived from the dynamic of the employee/employer relationship.
This silly analogy posted (which is pretty old, I first read it over a year ago or so) just proves there is a class war.
No it just proves that you’re understanding of socio-economics is defective. The employer doesn’t owe the employee a beer for the job he/she performs; the employee ONLY owes the compensation agreed on. And the compensated employee owes his/her employer a job done well…
Fyi, the employee doesn’t make the employer rich, they are a part cost of doing business. The consumer determines who gets rich and who doesn’t. And no one pays anyone to do a ‘bad’ job, People are compensated with a reasonable expectation that you will do a good job (i.e. the job you’re paid to do if nothing else).
Oh, it’s sooo hard being rich.
More money, more problems! Especially when you got folks uncritically declaring ‘class war’…
There is a class war going on, however ENVY is the vice responsible…
Oooops! I called you ‘brake’ when it was ‘Brack’
“There is a class war going on, however ENVY is the vice responsible…”
This is such a typical defense, making non-rich people point the large divide between the classes as being “envious.” Most people just want to have a decent life with a good family, and be able to retire on something. I like plenty of rich people when they play by the rules and take care of their employees like they should. The decline of the middle class over the years says it all.
Hopefully things will change for the better in the next few years.
“And no one pays anyone to do a ‘bad’ job.”
No, but that doesn’t mean they still don’t get paid. Never heard of “golden parachutes”?
Brack, please elaborate on your comment “The decline of the middle class over the years says it all.”
Do you think Tax Policy, what this article is all about, contributes to the decline of the middle class?
I don’t. I think Personal Income tax policy does everything possible to help the middle and lower class. I do think that corporate income taxes being too high in the USA has pushed what used to be decent middle class incomes overseas, along with Free Trade agreements that are anything but free, and that the inflationary policies of the FED has hurt those who are not at the front of the line receiving government funding before it gets devalued.
As far as golden parachutes are concerned, I don’t think you will find any argument that it is irresponsible and excessive. Class warfare though? Grubbing for all you can get is hardly class warfare in my opinion. More like the inevitable result of large hedge funds playing carrot and stick with executives and good old golfer/country club buddies sitting on the board.
I would like to know how these compensation packages are set up. It seems to me that the most fair way to do this would be if decisions regarding executive compensation were decided by individual stockholders and not the large hedge funds or the executives themselves, even if they are stockholders. Kind of like Congress voting themselves a raise.
I think tax policy strongly favors the rich. Just because the tax burden is higher for the rich doesn’t mean they’re losing money.
This video does a good job of what happened with Bush’s tax cuts, though I have no doubt in my mind you’ll disagree (no one’s changing anyone’s mind on the internet, nor anywhere else):
Brack
no one’s changing anyone’s mind on the internet, nor anywhere else
Mainly because most people are more interesting in mounting their respective soapboxes than engaging in well reasoned dialogue(which includes dealing with false presuppositions which masquerade as if axiomatic)
I said:
To which you replied: This is such a typical defense, making non-rich people point the large divide between the classes as being “envious.”
Is this really the measure by which you suggest we ascribe worth to our respective rationales -i.e. whether it is ‘typical’ or not? Cause it seems to me that the reason ‘atypical’ rationales -more often than not- remain ‘atypical, has a lot to do with inherent presuppositions which are contrary to reality. In fact many of these ‘atypical’ rationales often appear to be inherently anti-realistic, given how persistently dismissive of facts that contradict the premises of those purveyors of those ‘atypical’ rationales tend to get (i.e. somehow NO effort is even remotely deemed necessary to reconcile those premises with the facts)…
Nonetheless the entire ‘class war’ thing has much more to do with envy than greed. And if that response is ‘typical’, then I would venture to guess it probably has something to do with its compatibility with reality…
Most people just want to have a decent life with a good family, and be able to retire on something.
Everybody does, but everyones personal effort to attain those ends aren’t equal… Yea, yea I know, how ‘typical’ of me…
I like plenty of rich people when they play by the rules and take care of their employees like they should.
What rules, and written by whom? The employer ‘should’ make sure that they pay every penny of the previously agreed upon compensation for the labor used, in a timely fashion (i.e. NOT in the fashion in which many of us pay our bills)… Beyond that I’m gonna need you to elaborate on the notion of what employers ‘should’ do you have in mind…
The decline of the middle class over the years says it all.
Actually it doesn’t say much of anything.
I think tax policy strongly favors the rich.
I think our tax policy is arguably un-American (i.e.with us all being rumored to be equal in this country) and a flat tax (if income taxes can’t be abolished all together) would be more constitutional. Regardless, whats certain is that our tax policy is demonstrably counter productive…
Just because the tax burden is higher for the rich doesn’t mean they’re losing money.
No it actually means, that everyone including the government loses money. Less investment, less jobs, less people shopping, and consequence less government revenue derived from capital gains taxes, income taxes, and taxes derived from goods/service.
Furthermore, when are you people going to get around to noticing that government is incapable of not wasting billions. Is there a single project they’ve embarked upon that didn’t involve them wasting money in one form or another (all the crap no one needed, wanted, or even use, or over paying for the stuff we do. And then there are the political payoffs)? Even when they’re not trying to screw, they managed to oversee our getting screwed anyhow….
This video does a good job of what happened with Bush’s tax cuts, though I have no doubt in my mind you’ll disagree
Sorry, but the numbers don’t lie. The tax cuts were a really good thing…
“Mainly because most people are more interesting in mounting their respective soapboxes than engaging in well reasoned dialogue(which includes dealing with false presuppositions which masquerade as if axiomatic)”
You don’t understand that I see folks like yourself post the same things over and over again almost on a daily basis, and it just gets old how much the right and right-sympathizers go on and on about how they’re right about everything, so please, don’t talk to me about soapboxes. But seriously, there’s nothing that you have that you’re going to sell me on, especially when you use a source like The Heritage Foundation.
And you guys almost always have to have the last word.
You don’t understand that I see folks like yourself post the same things over and over again almost on a daily basis, and it just gets old how much the right and right-sympathizers go on and on about how they’re right about everything, so please, don’t talk to me about soapboxes.
You need to be a lot more concerned with what’s FACT, versus what’s NOT.
But seriously, there’s nothing that you have that you’re going to sell me on, especially when you use a source like The Heritage Foundation.
Wow, someone needs to step away from the kool aid!
Well look Brack, no one can protect you from your own willful ignorance. Should you ever decide its probably a good thing to take your heads out of the sand as it regards your asinine assumptions, you’ll not only find the footnotes in the article I linked well-sourced, but also an author with a face name, and a verifiable resume -i.e unlike the youtube video you linked (which, btw, has as about as many holes in it as your own ramblings here)…
And you guys almost always have to have the last word.
:-)
1 – The tax burden is higher for the rich.
2 – Tax policy STRONGLY favors the rich.
I am a very open minded person willing to listen to all sides so don’t think your reasons are wasted. But seriously Brack, how in the world do you figure these two are congruent?
The employer doesn’t owe the employee a beer for the job he/she performs; the employee ONLY owes the compensation agreed on. And the compensated employee owes his/her employer a job done well…
Looks to me like if the employer can afford to buy the beer in the first place his workers are under paid OR the ones buying his service are over charged . That means hes ripping off one or both. .
Looks to me like if the employer can afford to buy the beer in the first place his workers are under paid OR the ones buying his service are over charged . That means hes ripping off one or both…
This type of reasoning still begs the question of what it is the employer ‘owes’ the employee. The other side of the same coin being what does an employer ‘deserve’ to keep for having the ingenuity to start/run a business in the first place.
The fact that the employer can pick up over half the beer tab doesn’t mean anyones getting ripped off. The employee is ‘ripped’ off if he was working and didn’t get his/her agreed upon salary in full and on time, and the customer is ‘ripped’ off if he/she paid for goods/services that were sub par to their reasonable expectations.