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How Taxes Work - A Simple Explanation
Myself | 1/22/03 | Myself

Posted on 01/22/2003 3:25:30 PM PST by LiveFreeOrDie2001

HOW TAXES WORK...

This is a VERY simple way to understand the tax laws.

Let's put tax cuts in terms everyone can understand. 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 \$7, the eighth \$12, the ninth \$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). "Since you are all such good customers," he said, "I'm going to reduce the cost of your daily meal by \$20." So now dinner for the ten only cost \$80.00.

The group still wanted to pay their bill the way we pay our taxes. So the first four men were unaffected. They would still eat for free. But, what about the other six -- the paying customers? How could they divvy up the \$20 windfall so that everyone would get his "fair share?"

The six men 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 end up being PAID to eat their meal. So the restaurant 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 paid nothing, the sixth pitched in \$2, the seventh paid \$5, the eighth paid \$9, the ninth 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," 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 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 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!

TOPICS: Activism/Chapters; Business/Economy; Constitution/Conservatism; Culture/Society; Editorial; Government
KEYWORDS: badamerican; dennismiller; georgecarlin; tednugent
1 posted on 01/22/2003 3:25:30 PM PST by LiveFreeOrDie2001

To: All
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2 posted on 01/22/2003 3:28:17 PM PST by Support Free Republic (Your support keeps Free Republic going strong!)

To: LiveFreeOrDie2001
Seen it before, but it's worth repeating repaeating.

Should be required in the curriculum of all gradiating highschool students. In fact, they oughtta make 'm learn it by rote.

3 posted on 01/22/2003 3:31:54 PM PST by dasboot

To: dasboot
Yea, a friend mailed it to me.

The left will never wake up....

4 posted on 01/22/2003 3:53:03 PM PST by LiveFreeOrDie2001 (Know any FR Single Women? Send Her my way, I need one...!)

To: LiveFreeOrDie2001
OH, but the rich can better afford the higher taxes.... </ sarcasm off >

Socialists - gotta love 'em...don't we...at least that's what they tell us. We have to be tolerant, you know....
5 posted on 01/22/2003 4:06:01 PM PST by TheBattman

To: LiveFreeOrDie2001
The first four men -- the poorest -- would pay nothing; the fifth would pay \$1, the sixth would pay \$3, the seventh \$7, the eighth \$12, the ninth \$18 and the tenth man -- the richest -- would pay \$59.
The group still wanted to pay their bill the way we pay our taxes.

So the new allocation would be: first four = 0, fifth = 80¢, sixth = \$2.40, seventh = \$5.60, eighth = \$9.60, ninth = \$14.40 and tenth = \$47.20.

Simple math. No problem.

6 posted on 01/22/2003 4:19:29 PM PST by Willie Green (Go Pat Go!!!)

To: TheBattman
Being tolerant with the stupid & immature is what got us in this mess in the first place.

Spare the rod & spoil the child.

7 posted on 01/22/2003 4:22:16 PM PST by norraad

Tolerant - That's history for me.
8 posted on 01/22/2003 4:53:38 PM PST by LiveFreeOrDie2001 (Know any Single FR Women? Send Her my way, I'm Looking for one...!)

To: nutmeg
bump
9 posted on 01/22/2003 4:54:55 PM PST by nutmeg

To: LiveFreeOrDie2001
Very good.

Now rewrite it, to include that the poorest 4 are actually being paid to eat their meals, and you'll have it.

Since Government disproporationately provides services (including welfare) to the poor, they are receiving money and not paying anything into the system.

10 posted on 01/22/2003 8:29:19 PM PST by DAnconia55

To: DAnconia55
.

 VECTIGALIA NERVI SUNT REI PUBLICAE.

.
11 posted on 03/08/2003 12:21:06 PM PST by vannrox (The Preamble to the Bill of Rights - without it, our Bill of Rights is meaningless!)

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