Friday, September 29, 2017

Tax Facts

Looking at the facts demonstrates how unfair our US Income Tax system is.  Lets look at a hypothetical example. Suppose that every day, ten men go out for dinner. 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 pays $12;
the ninth would pay $18;
and the tenth man, the richest, would pay $59.

"That's what they decided to do. The ten men ate dinner in the restaurant every day and seemed quite happy with the arrangement --- until one day, the owner threw them a curve (in tax language a tax cut).  Because they were good customers, he lowed their bill from $100 to $80.
How do you fairly split up the $20 tax cut?

As before, the first four men paid nothing;
now the fifth man also paid nothing;
the sixth man now paid $2;
the seventh paid $5;
the eighth man paid $9;
the ninth man paid $12;
leaving the tenth man with a bill of $52 instead of his earlier $59.
Each of the six was better off than before. And the first four continued to eat for free.

But once outside the restaurant, the men began to compare their savings. 'I only got a dollar out of the $20 reduction,' declared the sixth man, but he, pointing to the tenth. 'But he got $7!'. 'Yeah, that's right,' exclaimed the fifth man, 'I only saved a dollar too; it's unfair that he got seven times more than me!'

'"That's true,' shouted the seventh man, 'why should he get $7 back when I got only $2? 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 he didn't show up for dinner, so the nine sat down and ate without him. But when it came time to pay the bill, they discovered, a little late what was very important. They were now Fifty-Two Dollars short of paying the bill. Imagine that!

And that, boys and girls, journalists, and college instructors, is how the 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 at the table anymore.

"Where would that leave the rest? Unfortunately, most taxing authorities anywhere cannot seem to grasp this rather straight forward logic."

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