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How Taxes Break Down

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Kral4me:
Saw this on another forum  ;)

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, boys and girls, 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.


NOTE from JD : I wish I could be that tenth man LOL! Greek Islands here I come!

rocket:
I can't agree more.  I belive in either a flat rate (x% for all) or a flat tax ($x for all).  Its the people who have money that pay for welfare, medicare, prisons, etc.  Stuff they don't use.  I'm not about abolishing tax, but the tax system is not fair.  My retirement goals, if reached, will put me in a much higher tax bracket just before i retire.  I'll be paying over half my money to the government!  Right now i'm doing ok only cause i bought a house.  if not for that, my refund would be pennies on the dollar of what it is now.

And don't even get me started on social security!

mallcrawl:
lets not forget that the math in this only adresses income tax, not sales tax which runs equal acrosse dthe population, property taxes which have been proven to be regresive (ie impact the poor more than the rich) ond so on.
 
My biggest gripe with taxes lies in the property tax, not only do governments charge you for making the money to buy a home but then they get to charge you every year for owning it weather you continue to make money or not, and often the taxes go up at that point in your life when your income is going down (think retirement)

Cheek-Bone:
That is so ture, when we hear that we are getting a tax relief on top of our regular taxes it sound great but behind the scenes the rich are still getting richer and us poor asses are just getting poorer.

rocket:
Don't begrudge all "rich" people.  many of them have made thier own fortunes, starting from where we are, or worse.  I know there are a lot of people who inherit thier money, but not all of them.  And at some point in history, thier ancestors had to make the money.

Thats one of the reasons this is such a great country: if you have the right ideas/skills/etc, you can change your financial "status."  Think of how in India where you are stuck in a career based on who your dad is.  some caste levels are regarded as less than human, and are treated as such.

Be glad you live in a country where you have the opertunity to make your life better (however you define better).

And in case you didnt' know, the upper levels of middle class and above won't see that rebate check.  If it wasn't for the fact that a large portion of military pay isn't taxable, I wouldn't get the rebate.  Am i rich?

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