"U.S. Tax System Explained, in Beer"

Ah, a classic!

And exactly and precisely true. (The top 10% of earners pay something like 60% of all personal income tax.)

mac

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U.S. Tax System Explained in Beer

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.

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 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 ( the richest) 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, 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.

Thin end of the wedge (taxes, Social Security)

A friend sent a blurb about how when Social Security started, there was all manner of representations made of how little it would cost, how modest it all was, etc. My reply:

Now *here's* something i'd like to have engraved on the foreheads of all
citizens.

(Interestingly--or not--the exact same kinds of promises were made when the
income tax was introduced: It would only be 1%, and only on the richest 1%
of Americans--those earning over $10,000 a year (when the average worker
earned less than $1000, so that sounded safe).

The Brits talk about "the thin end of the wedge," and mock it. But maybe
it's actually an insight, eh?

Things To Remember Before Supporting Some Bright Idea to Have The Government
Help You:

1. They just want your money. Period. Because you have it -- not your fair
share, not for future generations, not because you owe society--because
you've got it--and they want it. Every new opportunity you give them, they
will turn the proverb about giving an inch and taking a mile into a painful
object lesson. Every time. Never fails. Never has and never will.

2. They can promise anything they want and the next Congress can do anything
it wants. Therefore remember Fulbright's remark in another context: Don't
vote on what you think THIS congress or THIS president (or governor or town
council) will do with the power you concede to them -- vote on what ANY
FUTURE Congress or President WILL BE ABLE to do with it--especially if the
future ones aren't as Wise and Kindly and Feeling Your Pain as the current
crop.

3. Notice carefully that there is never an Out clause built into any new,
big, expensive project or tax: If the promises and projections don't work
out, they won't cancel it, they won't reform it (and reformers will be
denounced shamelessly), they will just pile another tax or program or
bureaucracy on it.

4. Whenever a new program is proposed, or a tax to pay for something
wonderful, force yourself to remind yourself who will be running the
program/spending the money: the same knuckleheads who run--pick your
most-hated arm of the government: the Pentagon? (for you liberals) the HUD
(or whatever they are calling the housing and urban dev business these
days), the Post Office, the Social Security Administration, the Foreign
Service, the State Department, the FBI, the CIA, the Congress for that
matter, the Education Department, the Ag Department, the ha ha Small Bus
Administration, the Treasury? Or your local parking tickets admistrator.
THESE are the SAME kinds of people who will run your new favorite bright
idea--they don't import a busload of GOOD people -- they hire from the same
pool that populates the bureaucracies you hate! THINK about that for a
minute. Then remember item 3 above.

A little checklist can be a big help when you go to the polls.

michael mccarthy