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To add your comments to this topic, click on one of the 'Reply' links below.

Hope this isn't too controversial
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Donna from Mo    Posted 11-06-2004 at 07:03:53       [Reply]  [No Email]
This seemed to be worth passing on.

While you're watching the political commercials and listening to the politicians spin their web around unsuspecting and misinformed's a "Reality" lesson in economics from:

David R. Kamerschen, Ph.D, Distinguished Professor of Economics,

536 Brooks Hall, University of Georgia, Athens, GA.()


Top 1% earn 21% of all income; pay 37-1/2% of all taxes

Top 5% earn 35% of all income; pay 56-1/2% of all taxes

Top 10% earn 46% of all income; pay 67% of all taxes

Top 25% pay 84% of all taxes

Top 50% pay 96-1/2% of all taxes

Bottom 50% pay 3-1/2% of all taxes

Tax Cuts - A Simple Lesson In Economics

This is how the cookie crumbles. Please read it carefully.

Suppose that every day, ten people 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 people (the poorest) would pay nothing. The fifth would pay $1. The sixth would pay $3. The seventh $7. The eighth $12. The ninth $18. The tenth person (the richest) would pay $59.

So, that's what they decided to do. The ten people ate dinner in the restaurant 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 meal by $20."

So, now dinner for the ten only cost $80. The group still wanted to pay their bill the way we pay our taxes.

So, the first four people 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 people realized that $20 divided by six is $3.33. But if they subtracted that from everybody's share, then the fifth person and the sixth person would each end up being 'PAID' to eat their meal.

So, the restaurant owner suggested that it would be fair to reduce each person's bill by roughly the same amount, and he proceeded to work out the amounts each should pay.

And so:

The fifth person, like the first four, now paid nothing (100% savings).

The sixth now paid $2 instead of $3 (33% savings).

The seventh now paid $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 eat for free. But once outside the restaurant, the people began to compare their savings.

"I only got a dollar out of the $20," declared the sixth person. He pointed to the tenth person "but he got $10!"

"Yeah, that's right," exclaimed the fifth person. "I only saved a dollar, too. It's unfair that he got ten times more than I got!"

"That's true!!" shouted the seventh person. "Why should he get $10 back

when I got only $2? The wealthy get all the breaks!"

"Wait a minute," yelled the first four people in unison. "We didn't get anything at all. The system exploits the poor!" The nine people surrounded the tenth and beat him up.

The next night the tenth person 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 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 at the table anymore. There are lots of good restaurants in Europe and the Caribbean

BobInMN    Posted 11-06-2004 at 12:41:36       [Reply]  [No Email]
Wouldn't you have to know what the total income for all people and the total taxes collected? Then you would be able to figure out their tax rate. Remember, if you play with numbers long enough you can get them to reflect just about anything you want.

Ron/PA    Posted 11-06-2004 at 13:53:02       [Reply]  [No Email]
Bob, this is nearly a quote from an IRS report a few years ago, and actually no, you don't need all of the income numbers, except to determine the percentile of each range.
Top 1%=this much income, This many folks making that much,, Paying this much tax=this %of total tax paid,,,, Other than that all other info is available on everyones 1040

Donna    Posted 11-06-2004 at 13:08:52       [Reply]  [No Email]
I'm quite aware that you can read anything on the Internet, and much of it isn't true. However, my radar tells me that there is more than a smidgen of truth in this. That wouldn't hold water in a court of law, but I trust my radar.

Dieselrider    Posted 11-06-2004 at 09:38:58       [Reply]  [No Email]
Donna, that is good. Wow, 40% of the people pay nothing and yet I bet they btch the most about the govt. No wonder they don't want to see tax cuts. I printed this out for Marci, she does taxes and accounting.

Chas in Me    Posted 11-06-2004 at 07:38:29       [Reply]  [No Email]
Interesting post, Donna. Thank you.

Chas, looking for someone to buy him dinner, up here in Maine.

Ron/PA    Posted 11-06-2004 at 07:17:27       [Reply]  [No Email]
If it's too controversial, then we need to pull our heads out of the sand. With all the talk of jobs going off shore, we often times forget to mention how we may be DRIVING them off shore.
If anytime theres doubt, just put everything you own on the line, borrow against it, and open a business. It's amazing how fast opinions change when you're on the other side of the fence.
Ya done good Donna

Dug    Posted 11-06-2004 at 07:16:52       [Reply]  [Send Email]

Great info. Breaks it down so even the Dems and Libs can understand it!

Thanks for posting,


Clod    Posted 11-06-2004 at 08:43:59       [Reply]  [No Email]
If I remember correctly.Congress gets a lot of free stuff. Free gym.Free haircuts and maybe free meals.I might look that up again. The best way to get fair law is to make law apply to the politicians that create them.

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