“The American people will never knowingly adopt Socialism. But under the name of ‘liberalism’ they will adopt every fragment of the Socialist program, until one day America will be a Socialist nation, without knowing how it happened.”

Socialist Party presidential candidate Norman Thomas


Monday, September 17, 2007

If you don't read anything else today...read this

Circumspect reader David sent this to me today and I thought it was the most concise, clear explanation of how the U.S. tax system works to subvert achievement and punish success. Give this little story a read and then defend to me the current progressive tax structure under which we toil today...

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 on 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 know 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!"

If you were shocked, shocked to find out how our tax system punishes the successful and rewards the shiftless, then 1, you probably attended government schools where you gained self esteem but learned nothing, and 2, you need to support the FairTax or at least a flat tax in some form.

13 comments:

Kevin said...

The bar is an interesting place to compare to the real world. It has hierarchy, it has politics, business, relationships, and of course a governing body(that would be the owner). However it has one thing that separates it from the real world. Everyman has to pay his own share of the bill, and no one gets free rides. Each man pays or he doesn't get to drink, or he ends up in an alley beaten up and nude the next morning without any recollection of the night before. How can we compare this to real society? Its simple, make people pull their own in this country, or make them leave. Let those that earn their share enjoy their share, not share it with others. This is my modest proposal to you. No more taxes, or at least very little taxes, and punish those that don't pay the taxes.

ed said...

Poverty and misery are supposed to be the punishment for laziness and degeneracy in a proper world. But when you have liberals who punish achievement through confiscatory taxation in order to reward laziness, then you have a broken system. Where is the motivation to get a job or two, stay in school, stay off drugs, don't get pregnant before marriage, when the government hands out to bums, fabulous cash and prizes paid for by people who made all those good choices.

Liberals love nothing more than spending other peoples money.

Kevin said...

And that is why liberalism should be a crime!

Kevin said...

Oh and anyone that thinks my idea is bad, just take a look at some of the ideas liberals have, they are worse.

Randall McMurphy said...

My only question Kev is that if one doesn't pull his weight in your world, does he end up "Beaten and nude in the alley with no recollection of the night before"?
Or does that just happen to those who disagree with you?
By the way, the bars I occasionaly enter have more civilzed approaches (IOU's/ Checks/ Tabs etc.)
I deal with the government daily. It is ridden with bueracracy and mostly it functions only because we have no choice but to have a centralized body for rules and regulations. But to suggest that we go to a "loan shark" mentallity on payment issues is wrong. I agree that all men should carry their own load, but sometimes circumstances beyond ones control effect the results and people need help. Payment plans, terms, reduction of debt; all have been used successfully time and time again to better this nation. We have not resorted to violence. Your seem naive in your retort. My head hurts I gotta go now.

Kevin said...

Ok, you make a good point, and we have loan companies, people who help with taxes and debt. And we have credit companies, so what you are saying is correct, and no, not everyone who doesn't pull their weight will end up beaten, but we don't need the government hand me downs to solve these problems. The government money is given out, its not loaned, and money given away will not be returned. Essentially, with the taxes the way they are, the government is literally stealing from the rich and giving to the poor, because the rich receive no tax cuts (% wise compared to the poor), and the poor population is only growing in this country. The gap between the rich and the poor is getting bigger every year, and it is directly because the government gives out so much monetary aid to those who refuse to help themselves in this world.
You see Ralph, in your bars, the IOU's, checks, and Tabs are eventually going to get paid, or at least they should because thats bad business if they don't. In the American Tax collecting system, the money given to the poor isn't given back, and thats the point I was trying to make.

Rndall McMurphy said...

The name is Randall, not Ralph. When the government doles out money, however, it also gets paid back. It is paid by the higher wage earners and not those recieving the benifits. This country is rift with problems and situations that are so far gone, that they can't be undone. Taxes fall in that category. The bar analogy is nice, its simple and it works. Income is very different. You see, most taxpayers never file a correct return. Your mom gives you a $100 birthday gift - taxable and it should be reported as income. Is it done - no way. Probably shouldn't be, but rules in place say different. Is the IRS lookig at all checkbooks, again no way nor will they ever. But it does point out the flaws in this system. a flat tax would kill the government, while only helping the upper end wage earners. The system should be set up to allow for a few years (like Ed paying for college tutition) when we could declare a break. That would be nice. it would also allow for debt elimination, etc. Not a bad idea. Regardless there young man, I think that you are starting to exercise your mind in regards to free enterprise and the work world. Bully for you. Keep swinging for the fence, 'cause eventually you will end up like the rest of the world - just happy with a single and a future opprtunity to bat.

Kevin said...

No no, money given out by the government, is money taken from the taxpayers. And a majority of that money comes from the upper and middle class. And its not used to benefit the ones who had to pay it out. Its used to benefit those who can't or refuse to help themselves. The majority of it goes to medicare or welfare, which is unfair to those who had to pay it. A flat tax would benefit everyone. Yes it may bring in less money, which means less welfare. What is that going to do for the country? Make people have to get off their butts and work for a living. It gives incentive to try in life. Right now, the government punishes you for trying too hard, by raising the taxes as your income increases, but with a flat tax, or equal tax, there is an incentive to work harder for more money. But either way, it won't affect me, because this country is going to be so screwed up when a liberal takes power, that I will be better off somewhere else. I am moving to Australia when I graduate, they seem to know how to run a country there.

Joe Camel said...

Good luck down under squire Kevin. I am sure when you get indoctrinated to the outback that you will find they have issues as well. A flat tax will not happen. The bloodsucking degenerates that are in congress are smart enough to realize that they would lose an inordinate amount of cash with the onset of this system. Forget less welfare, they could care less about that, all they want is money to dump into their coffers by all the various means available. When you figure this out let me know: How can a man that makes millions a year, afford to spend his money running for a job with a $80,000 salary? Answer is under the table with his hand in your back pocket my friend.

Kevin said...

Yes unfortunately the people we elect to run this country don't actually care about the country. All they care about is making money for themselves, and sadly enough they are getting paid our tax dollars, which means they won't give a hoot how the tax money is spent.

Ed said...

Actually Steve Forbes showed that a 17% across the board flat tax, excluding those who are under the poverty line, would bring in the same amount of money as the current onerous progressive tax.

Or if that doesn't work for you, John Lender's FairTax, which is a consumption tax, actually creates an industrial and business tax haven out of America, to which industries would flock from around the world rather than or industries fleeing. That would also, coincidentally, solve the immigration problem. There would be jobs galore for everybody.

Liberals love the progressive tax because through class warfare, it lets them take from the productive and give to the unproductive in return for votes. So you see, the democrats have a vested interest in having as many Americans in poverty, misery, and despair as possible so they can come riding to the rescue, point accusingly at the rich guy down the street, and say, "That evil rich guy has some of the money you should have. Vote for me and I'll take some of his away and give it to you."

That's liberalism in a nutshell. Sickening isn't it?

Joe Camel said...

Correct Ed, but it still wil not happen, because of the exact reason you state. The Dems cannot affod to let go of the Tax strings.

ed said...

Right you are Joe. A radical change in the way the government collects taxes as we've discussed here, would represent the single greatest transfer of power from the federal government to the people in recorded history short of a bloody revolution. That's why our craven, power-hungry politicians will never allow that to happen. They use the heinously unfair progressive tax code to control every aspect of our lives.