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Tax Cuts

Yes, I realize this is an oversimplified model and it's simply a story, but the point is clear and is a fairly accurate portrayal of how the system works (I always liked this email):

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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. This is how the cookie crumbles. Please read it carefully. 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 would pay $7. The eighth $12. The ninth $18. The tenth man (the richest) would pay $59. So, 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 VERY 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 ones who get the most money back from a reduction are those who paid in the most. 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.

At the rate that Bush provides tax cuts, US economy will crumble. People can't realize that money does not fall out of the sky. By getting more tax cuts, they lose in the long run.

I refuse to simplify any comment on tax cuts/fiscal policy. Therefore I won't comment at all .

If you need me, I'll be trolling around and lurking in the state of the US economy thread or the congressional budget thread

I'm the tenth guy that skipped the to Caymans

Tax evasion err aviodance here I come!

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Originally posted by Yoepus I'm the tenth guy that skipped the to Caymans Tax evasion err aviodance here I come!

I don't know about you, Yoepus, but I'll be heading to private island in the South Pacific where I'll never be heard from again. And I'm taking my dinner with me!

you can't think like that!

i don't even want to comment on that. tax cuts doesn't hold in the long run as much as tax raisings doesn't hold in the long run.

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Originally posted by St_Andrew you can't think like that! i don't even want to comment on that. tax cuts doesn't hold in the long run as much as tax raisings doesn't hold in the long run.

Please clarify. People preach about fairness and equality but when it's spelled out just how much inequality is in the system you say that you can't think like that? I'm not advocating cutting any taxes to zero, I'm simply pointing out how much senseless griping goes on that is baseless and without merit.

The system is inherently unfair to the top income earners yet they're the ones who end up taking the blame for the failures of the lower and middle class citizens.

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Originally posted by Shakka Please clarify. People preach about fairness and equality but when it's spelled out just how much inequality is in the system you say that you can't think like that? I'm not advocating cutting any taxes to zero, I'm simply pointing out how much senseless griping goes on that is baseless and without merit.

how can you even speak about fairness when some people have enough money to do whatever they want and some have to work their asses of to get their daily bread? it's rather logical that the more you earn, the more you have to pay in taxes. fact also remains, as this "article" states, if everyone should pay equal, we could by no way afford the public standard. the important thing is that the ones that earn much, also get a lot more money than any other, after tax.

the "you can't think like that" statment was mostly for that if everyone thought that we can cut the taxes, and therefore get more high incommers in our country, it would simply not work. cause there would be no "low tax" country to move to. yeah i'm really tierd right now so/and my english is not what i want it to be so ask again tomorrow if you don't understand but you probably do

btw, you say working class should be more greathful to the upper class, kind of true, but also upper class should be more greatful for working class. everyone use everyone in this society, we should just be more greatful

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it's rather logical that the more you earn, the more you have to pay in taxes.

It is? I would think it is much more logical that the more public services you use, and therefore the greater cost to society that you represent, the more you have to pay in taxes.

I support tax cuts, but not the way Bush is doing them. You can't cut taxes and then spend like a liberal.

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Originally posted by St_Andrew how can you even speak about fairness when some people have enough money to do whatever they want and some have to work their asses of to get their daily bread?

Equality of opportunity does not equal equality of outcome. You can't fight the bell curve. It's not my fault that some people are not as well off--why should it be my obligation to provide for them as well as myself? I'm happy to donate to charity etc, but to tell me I'm obligated by force to support someone I've never even met just doesn't sit well with me.

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it's rather logical that the more you earn, the more you have to pay in taxes.

Absolutely, however the progressive nature of the U.S. Tax code doesn't work that way. Obviously 10% of $1000 is a lot more than 10% of $100 ($100 vs. $10), but punishing the higher wage earner with a higher rate is a political ploy to try to "Level the playing field" after the fact.


And yes, both ends of the spectrum should appreciate eachother but I do believe that the guys giving the jobs out hold the upper hand. The lower end workers certainly can choose not to work if they don't like the wages, but lower end jobs are more commoditized than the higher end jobs and low-wage earners are easily replaced by people who are willing to work for the same wages that they themselves feel they are too good for.


Oh well--you and I seem to clash a lot on this subject, but at least our conversations have become more cordial!

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Originally posted by Arbiter I support tax cuts, but not the way Bush is doing them. You can't cut taxes and then spend like a liberal.

Arbiter is correct. Bush needs to take a hardline stance on his spending and veto some bills. I have a feeling that he's been more loose with the purse strings in the name of economic stimulus/pumping more juice back into the economy, but in the long-run it will be detrimental if he doesn't ease up.


In addition, as I've stated before, I would support a consumption tax, much like Arbiter suggests. The more you consume, the more you should be required to put back in the pot. Unfortunately politics gets in the way of sound reasoning.

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Originally posted by Arbiter I support tax cuts, but not the way Bush is doing them. You can't cut taxes and then spend like a liberal.

Why can't you, Bush seems to have no problem doing it.

What ever happened to the Congress by the way, do they still exist? Haven't heard of them doing anything on their own merit since Bush came to office

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Originally posted by Yoepus Why can't you, Bush seems to have no problem doing it.

Actually Bush has essentially raised our taxes. We can't sustain an indefinite budget deficiet - so sooner or later our taxes are going to have to be raised even higher than before to pay off all our debts, the interest on those debts, plus any of his new programs which are still in place.

Prolonged, excessive deficits will lead to stagflation ... and that is by far worse than a mere recession.

quote:

Originally posted by Arbiter Actually Bush has essentially raised our taxes. We can't sustain an indefinite budget deficiet - so sooner or later our taxes are going to have to be raised even higher than before to pay off all our debts, the interest on those debts, plus any of his new programs which are still in place.

Well hopefully we'll grow out of the deficits as economic activity picks up, but I have an awful feeling that whoever wins in November is going to have a stock market that's shitting the bed. I have a bad feeling it's about to get ugly.

Dang, Shakka's story was best I heard in a long while about taxes and made a lot of sense to this old redneck.
I'm just friggin' pissed off we're paying so much for gasoline. That drives everything up. WTF? Didn't we just secure Iraq or what? And I mean WTF for if the gasoline prices soar higher than when Saddam was in power?


[[[smoke]]]

You can always blame China!

Those commie bastards! Maybe I'll stop buying their tennis shoes! They never friggin' fit anyway...
Next time I see a chinaman when I'm pumping gas, I might just stick the hose up his ass while I'm at it!

Lol!
[[[smoke]]]

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