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.So, that's what they decided to do. The ten men drank in the bar every day and seemed quite happy with the arrangement,
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.
The group still wanted to pay their bill the way we pay our taxes so the first four men were unaffected.And so:
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!
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.
David R. Kamerschen, Ph.D., Professor of Economics, University of Georgia
For those who understand, no explanation is needed. For those who do not understand, no explanation is possible.
The professor asked the young man what was the matter. The student told him he had a bullet lodged in his back. He had been shot while fighting Communists in his native country who were trying to overthrow his country's Government and install a new communist regime.
In the midst of his story, he looked at the professor and asked a Strange question. He asked: "Do you know how to catch wild pigs?" The professor thought it was a joke and asked for the punch Line. The young man said that it was no joke.
"You catch wild pigs by finding a suitable place in the woods and put corn on the ground. The pigs find it and begin to come everyday to eat the free corn. When they are used to coming every day, you put a fence down one side of the place where they are used to coming. They get used to the fence, they begin to eat the corn again and you put up another side of the fence. They get used to that and start to eat again. You continue until you have all four sides of the fence up with a gate in the last side. The pigs, which are used to the free corn, start to come through the gate to eat that free corn again. You then slam the gate on them and catch the whole herd. Suddenly the wild pigs have lost their freedom. They run around and around inside the fence, but they are caught. Soon they go back to eating the free corn. They are so used to it that they have forgotten how to forage in the woods for themselves, so they accept their captivity."The young man then told the professor that this is exactly what he sees happening in America. The Government keeps pushing us toward Communism/Socialism and keeps spreading the free corn out in the form of programs such as supplemental income, tax credit for unearned income, tax cuts, tax exemptions, tobacco subsidies, dairy subsidies, payments not to plant crops (CRP), welfare, medicine, drugs, etc. While we continually lose our freedoms, just a little at a time.
One should always remember two truths: There is no such thing as a free lunch and you can never hire someone to provide a service for you cheaper than you can do it yourself.
If you see that all of this wonderful government 'help' is a problem confronting the future of democracy in America, you might want to send this on to your friends. If you think the free ride Is essential to your way of life, then you will probably delete this email. But God help you when the gate slams shut!
The Only thing I can add to this is a question for you......Which candidates out there are most eager to spread around the feed corn, and what might their motives be?
A young woman was about to finish her first year of college.
Like so many others her age, she considered herself to be a very liberal
Democrat, and among other liberal ideals,
was very much in favor of higher taxes to support more government programs, in other words,
redistribution of wealth.
socialism |'sO shåËŒlizåm|
noun
a political and economic theory of social organization that advocates that the means of production, distribution, and exchange should be owned or regulated by the community as a whole.
Editor's comment: Just about where we are now.
- policy or practice based on this theory.
- (in Marxist theory) a transitional social state between the overthrow of capitalism and the realization of communism.
She was deeply ashamed that her father was a rather staunch Republican, a feeling she openly expressed. Based on the lectures that she had participated in, and the occasional chat with a professor, she felt that her father had for years harbored an evil, selfish desire to keep what he thought should be his.
capitalism |ˈkapåtlËŒizåm|
noun
an economic and political system in which a country's trade and industry are controlled by private owners for profit, rather than by the state.
One day she was challenging her father on his opposition to higher taxes on the rich and the need for more government programs. The self-professed objectivity proclaimed by her professors had to be the truth and she indicated so to her father.
He responded by asking how she was doing in school.Taken aback, she answered rather haughtily that she had a 4.0 GPA, and let him know that it was tough to maintain, insisting that she was taking a very difficult course load and was constantly studying, which left her no time to go out and party like other people she knew. She didn't even have time for a boyfriend, and didn't really have many college friends because she spent all her time studying.
Her father listened then asked, "How is your friend Audrey doing?"
She replied, "Audrey is barely getting by. All she takes are easy classes, she never studies, and she barely has a 2.0 GPA. But she is so very popular on campus; college for her is a blast. She's always invited to all the parties, and lots of times she doesn't even show up for classes because she's too hung over."
Her father asked her, "Why don't you go to the Dean's office and ask him to deduct a 1.0 off your GPA and give it to your friend Audrey, who only has a 2.0. That way you will both have a 3.0 GPA and certainly that would be a fair and equal distribution of GPA."
The daughter, visibly shocked by her father's suggestion, angrily fired back, "That's a crazy idea. How would that be fair? I've worked really hard for my grades! I've invested a lot of time, and a lot of hard work. Audrey has done next to nothing toward her degree. She played while I worked my tail off!"
The father slowly smiled, winked, and said gently, "Welcome to the Republican Party."
The villagers seeing that there were many monkeys around, went out to the forest, and started catching them. The man bought thousands at $10 and as supply started to diminish, the villagers stopped their effort. He further announced that he would now buy at $20. This renewed the efforts of the villagers and they started catching monkeys again.
Soon the supply diminished even further and people started going back to their farms. The offer increased to $25 each and the supply of monkeys became so little that it was an effort to even see a monkey, let alone catch it!
The man now announced that he would buy monkeys at $50! However, since he had to go to the city on some business, his assistant would now buy on behalf of him.
In the absence of the man, the assistant told the villagers. "Look at all these monkeys in the big cage that the man has collected. I will sell them to you at $35 and when the man returns from the city, you can sell them to him for $50 each."
The villagers rounded up with all their savings and bought all the monkeys. Then they never saw the man nor his assistant again, only monkeys everywhere!
Now you have a better understanding of how the stock market works.
Taxes and Economics