# I don't think this could get explained any better then this.

Gina - posted on 03/01/2011 ( 4 moms have responded )

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Here's An article I ran across today that I thought was very interesting! I loved it and thought you might like it also... Especially with everything that is going on right now.
I thought this explained it very well even though some will still not get it.
Taxes and How They Work

Sometimes politicians can exclaim; "It's just a tax cut for the rich!", and
it is just accepted to be fact. But what does that really mean? Just in case
you are not completely clear on this issue, we hope the following will help.

Tax Cuts - A Simple Lesson In Economics - by David R. Kamerschen, Ph.D.,
Distinguished Professor of Economics; 536 Brooks Hall, University of
Georgia.

Let's put tax cuts in terms everyone can understand. Suppose that every day,
ten men 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 men (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 man (the richest) would pay \$59.

So, that's what they decided to do.

The ten men 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 men 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 men 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 their meal.

So, the restaurant 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 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 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 me!"

"That's true!!" shouted the seventh man. "Why should he get \$10 back when I
got only \$2? 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 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 .

Thanks David R. Kamerschen, Ph.D., Distinguished Professor of Economics, U
of Georgia

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Tammy - posted on 03/02/2011

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Heck, it wouldn't even have to be 10%. As for that \$5600 back from the \$45,000 pay. I will be brutally honest here. The government is actually MORE stupid than that. Last year we made less than \$40,000. We got back \$8400 between federal and state. When I looked to see what we had paid in.....they gave us \$6000 of someone else's money! So yes, I think our tax system could use a huge overhaul.

Although, I hope it came from a liberal, because then THEIR tax money can be used for something THEY don't like:) Christian Charities:), Pro LIFE centers, etc. I just wish there was a way I could let them know what their money is doing. LOL

Brenda - posted on 03/02/2011

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Great analogy! It is definitely one of the better ones I have seen. I wonder who could dispute this illustration after having read it? Hopefully it will be enlightening to those who don't know.

Personally, I'm of the mind that we should have a fair/flat tax and everyone just pay 10%. But unfortunately, those in the current government can't seem to add or subtract numbers very well and have a voracious appetite for spending, so unless we are able to streamline the government, I don't know that it would work.

Gina - posted on 03/02/2011

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This is a great explanation, especially since it's easy for everyone to understand. This is what gets me too, how people who make under a certain amount of money each year don't pay taxes. I heard a commercial on the radio yesterday talking about how they can get \$5600 dollars back if they made less than \$45,000 last year. They claimed it was money they already paid in, so they should get it back. What....... that means when they get it back, they haven't paid a dime in taxes.

Tammy - posted on 03/01/2011

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Looove it! Just reposted on my facebook. Thought I needed another stimulator for conversation since the school one died out!:)