NATION: Some People Just Don't Get It!

Below: always got to include a photo, so here it is - Peace, brothers and sisters. Yes, that's a selfie of my shadow on an outhouse - hey, I liked the photo, so sue me! Click to enlarge (PLEASE!).

Suppose that every day, ten US citizens go out for lunch 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. In fact, they would get an earned income tax credit if they have a job.
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  US citizens  ate lunch in the restaurant every day and seemed quite happy with the arrangement, until one day, the owner threw them a curve ball. "Since you are all such good customers," he said, "I'm going to reduce the cost of your daily lunch by $20.00."  So lunch for the ten US citizens would 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 eat for free (and actually get a paid credit just to eat).  But what about the other six US citizens?  How could they divide the $20 windfall so that everyone would get their 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 eat his lunch. So the bar owner suggested that it would be fair to reduce each US citizen’s bill by a higher percentage the poorer he was, to follow the principle of the tax system they had been using, and he proceeded to work out the amounts he suggested that each should now pay.

And so the fifth person, like the first four, now paid nothing (100% off). In fact, now the first through first with get paid to eat (the earned income tax credit).
The sixth now paid $2 instead of $3 (33% off).
The seventh now paid $5 instead of $7 (28% off).
The eighth now paid $9 instead of $12 (25% off).
The ninth now paid $14 instead of $18 (22% off).
The tenth now paid $49 instead of $59 (16% off).
Each of the six was better off than before.  And the first four continued to eat lunch for free.  But, once outside the bar, they began to compare the amount they got off.

The sixth person said, "I only got $1 off out of the $20 while the tenth person got $10 off!" "Yeah, that's right," exclaimed the fifth person.  "I only got $1 off, too.  It's unfair that he got ten times more benefit than me!"

"That's true!" shouted the seventh person.  "Why should he get $10 off, when I got only $2?  The wealthy get all the breaks!" "Wait a minute," yelled the first four person in unison, "we didn't get anything at all.  This new tax system exploits the poor!" The nine people surrounded the tenth and told him they they were angry that he got so much off while they each got very little.

The next day the tenth person didn't show up for lunch, so the nine sat down and had their lunchs without him.  But when it came time to pay the bill, they discovered something important.  They didn't have enough money amongst all of them for even half of the bill!

And that is how our tax system works.  The people who already pay the highest taxes will naturally get the largest 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 eating overseas, where the atmosphere is somewhat friendlier.

For those who understand, no explanation is needed.
For those who do not understand, no explanation is possible.

[Tm’s note: yes, I stole this from someone else. It was forwarded to me. I rarely or never do this, but illustrated the point so well that our media does not understand at all. I changed the story from “men” to “U.S. citizens”, and added the fact that the working poor not only do NOT pay taxes, in fact that get a tax payment check from the IRS every year in the form of the earned income tax credit; not sure about the exact name of this program, but the working poor pay no federal income taxes and get a tax credit payment as well. Tried to fix this story quickly to reflect this, but do not know how successful/accurate I was...no, I’m not a CPA, so it may not be quite exactly correct. For the record, I am not in the 1 percent, nor the 10 percent, but more likely around the 25th percent, or the 8th guy, so I problem would be doing okay in the above scenario.]

Click Here to go back to "Tim Waag Blog" Home Page!