I got this analogy in an email today. It is much better than the one I wrote earlier using a classroom example. It comes from a UGA Economics Professor. Here it is:
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.!
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 fifthman. ‘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!
(The 10th man was originally paying $59 of $100, then $49 of $80)
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
Remember, my liberal friends, that you were warned. I don’t want to hear any whining from any of you once your jobs are shipped overseas.
Barack Obama is standing by his “Spread the Wealth” comment. On Good Morning America, ABC News anchor Robin Roberts asked Barack Obama if he regretted the “spread the wealth” comment. Here is Obama’s answer:
“Not at all. Look, if John McCain’s best argument is that he wants to continue the same Bush tax cuts for the very wealthiest Americans, that in 2000 he himself opposed, and in the meantime, fails to give tax cuts to 100 million people in America that I would give tax cuts to John McCain’s going to have some problems. Because the American people understand that the way we grow this economy is from the bottom-up. And for us to want to continue to give tax breaks to big corporations and the wealthiest, instead of the middle class that are desperately in need of some help right now, would not only be bad for the families, it would be bad as the economy as a whole. It will prevent the economy from recovering. ”
Let me make a few points here. First of all, both candidates are going to continue the Bush tax cuts for the first two years of their term. The tax cuts won’t expire until 2011. Second, Bush cut taxes across the board and once the tax cut expires, it cause taxes to go up. That is raising taxes. Third, you can’t grow the economy from the bottom up by taxing the rich. Has anyone ever been given a job by a poor person? No. Also, tax hikes on the rich hurt the middle class because they cause jobs to be cut and prices to be raised. I love these campaign ads that Democrats have been using that point out that Republicans are trying to give tax breaks to companies that are sending jobs overseas. Jobs are going overseas because taxes are lower there. Is raising taxes more going to give them incentive to come back? Talk about keeping the economy from recovering. If you vote for this Communist, then you are slapping every soldier that died for our freedom since the American Revolution in the face.
It is coming more and more apparent that Obama’s relationship to Bill Ayers was closer than he has admitted. This appeared in the Chicago Tribune on December 21, 1997 to promote Bill Ayers’ book A Kind and Just Parent: The Children of Juvinile Court. Obama wasn’t exactly denouncing Ayers’ terrorist actions here was he? For all of you Obama worshippers out there, I would like to know whether you still still believe Obama’s first lie about Ayers being just a guy in his neigborhood or do you believe his second lie about believing that Ayers had been rehabilitated? If you still believe the first lie, then you haven’t listened to your Messiah’s changing story that closely. If you believe the second then he has fooled you twice, shame on you.
“You go into these small towns in Pennsylvania and, like a lot of small towns in the Midwest, the jobs have been gone now for 25 years and nothing’s replaced them. And it’s not surprising, then, they get bitter, they cling to guns or religion or antipathy to people who aren’t like them or anti-immigrant sentiment or anti-trade sentiment as a way to explain their frustrations.” – Barack Obama
“Its not that I want to punish your success, I just want to make sure that everybody who is behind you..that they get a chance for success. I think that when you spread the wealth around, its good for everybody”. – Barack Obama
“…I’ve got two daughters. 9 years old and 6 years old. I am going to teach them first of all about values and morals. But if they make a mistake, I don’t want them punished with a baby.” – Barack Obama
“I can no more disown (Jeremiah Wright) than I can disown the black community. I can no more disown him than I can my white grandmother – a woman who helped raise me, a woman who sacrificed again and again for me, a woman who loves me as much as she loves anything in this world, but a woman who once confessed her fear of black men who passed by her on the street, and who on more than one occasion has uttered racial or ethnic stereotypes that made me cringe.” – Barack Obama
“To avoid being mistaken for a sellout, I chose my friends carefully. The more politically active black students. The foreign students. The Chicanos. The Marxist professors and structural feminists.” – Barack Obama
“An acorn doesn’t fall far from the tree” – Barack Obama
“The truth is, in order to get things like universal health care and a revamped education system, then someone is going to have to give up a piece of their pie so that someone else can have more.” – Michelle Obama
“People in this country are ready for change and hungry for a different kind of politics and … for the first time in my adult life I am proud of my country” – Michelle Obama
“America is a downright mean country” – Michelle Obama
I don’t know about the rest of you, but these words are very inspiring to me. I am inspired to make sure these two never live in the White House. Please get out and vote for McCain on November 4. Try to talk some sense into those around you.
A Zogby poll recently showed that a significant number of investors support McCain over Obama. The poll showed that 53% of investors prefer McCain compared to only 35% of investors for Obama. Investors are the people who understand the economy the most and how it works. On the flipside 52% of noninvestors support Obama to McCain’s 37%. To make a long story short, people who know what they are talking about support McCain and people who don’t support Obama. Too bad that most of the people voting are misinformed.
By the way, would someone please explain to me how Obama is going to give 95% of Americans a tax cut when 30% of Americans don’t pay taxes?
Also, Obama promised to cut capital gains taxes on small businesses. I would like to point out that small businesses pay income tax. They don’t pay capital gains taxes. That is like promising less rain to the desert.