# Interesting take on taxes

Discussion in 'Community' started by Backtothemac, Aug 1, 2002.

1. ### Backtothemac macrumors 601

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Jan 3, 2002
Location:
San Destin Florida
#1
Hey I thought this was very, very funny. I found it in the forums at smalldog. It is long, but it is very funny.

OUR PERSONAL TAX SYSTEM AND HOW IT WORKS Author unknown:

I was having lunch with one of my favorite clients last week and the conversation turned to the government's recent round of tax cuts. "I'm opposed to those tax cuts," the retired college instructor declared, "because they benefit the rich. The rich get much more money back than ordinary taxpayers like you and me and that's not fair."

"But the rich pay more in the first place," I argued, "so it stands to reason that they'd get more money back."

I could tell that my friend was unimpressed by this meager argument. Even college instructors are a prisoner of the myth that the "rich" somehow get a free ride in America. Nothing could be further from the truth.

Let's put tax cuts in terms everyone can understand. Suppose that every day 10 men go to a restaurant for dinner. The bill for all ten comes to \$100. If it was paid the way we pay our taxes, the first four men 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.

The 10 men ate dinner in the restaurant every day and seemed quite happy with the arrangement until 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. Now dinner for the 10 only costs \$80."

The first four are unaffected. They still eat for free. Can you figure out how to divvy up the \$20 savings among the remaining six so that everyone gets his fair share? The men realize that \$20 divided by 6 is \$3.33, but if they subtract that from everybody's share, then the fifth man and the sixth man would end up being paid to eat their meal. The restaurant owner suggested that it would be most fair to reduce each man's bill by roughly the same proportion as they had been paying in the first place, and he proceeded to work out the amounts each should pay. And so now the fifth man paid nothing, the sixth pitched in \$2, the seventh paid \$5, the eighth paid \$9, the ninth paid \$12, leaving the tenth man with a bill of \$52 instead of \$59.

Outside the restaurant, the men began to compare their savings. "I only got a dollar out the \$20," complained the sixth man, pointing to the tenth, "and he got \$7!" "Yeah, that's right," exclaimed the fifth man. "I only saved a dollar, too. It's unfair that he got seven times more than me!" "That's true," shouted the seventh man. "Why should he get \$7 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 he 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 were \$52 short!

And that, boys, girls and college instructors and owners of Small Dog, is how America's 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 any more. There are lots of good restaurants in Switzerland and the Caribbean.

2. ### Mr. Anderson Moderator emeritus

Joined:
Nov 1, 2001
Location:
VA
#2
Very simplified and not exactly correct, but interesting none the less. I'll have to pass that along to DutchessStreet and see what she thinks.

D

3. ### mcrain macrumors 68000

Joined:
Feb 8, 2002
Location:
Illinois
#3
Interesting? Yes. Correct? Not exactly.

If the only taxes were federal income taxes, perhaps that story would make sense, as might the all the justification and hard selling the Republican party constantly does to try to convince people (who won't truly benefit) that they should vote and support the Republican tax cuts.

By way of "I told you so" (Although not to you all), when the idea of tax cuts was first being pushed, I was one of the few who said that a tax cut would hurt our economy rather than help it. If you will all recall, Greenspan was, at the time, increasing the interest rates because the economy was running too hot, which risked serious inflation. Well, guess what a tax cut does to inflation and the economy? It's like throwing fuel on a fire. Not real smart, but then again, this is W we're talking about. Now, many overvalued (inflation compounded by corporate "evildoers") stocks are tanking.

Was it just me, or did anyone else notice that all the Republicans who were shouting about the 10th amendment and getting government out of our businesses pretty silent since Enron/Worldcom/AOL/etc...?

4. ### Backtothemac thread starter macrumors 601

Joined:
Jan 3, 2002
Location:
San Destin Florida
#4
mcrain. mcrain, mcrain. You and I both know that the problems with the economy were well grounded during the last 2 to 3 years of the Clinton administration. We also know that the accounting problems were taking place during who's administration? Who took more money from Enron republicans or democrats? As someone who made 28,000 last year, I can tell you that I enjoyed the 600 \$ back from Uncle Sam. It allowed us to take a vacation that we otherwise would not have been able to take. We also received a refund of over 2200 dollars last year on our taxes, and no, we did not cheat. Point being, we made 28,000 and got back all tax we had prepaid, the 600\$ and another 2200 and some change. Not bad for a middle class family would you say?

The tax cuts is not what has evaporated the surpluss, that is the war on terror that has done that. I wish people would ask Tommy why we have 58 open federal judge positions right now. Why can they not give the administration what it needs to be successful on the war and on the economy.

What makes me sick is that the other day with a 488 point rally, Bore (sorry Gore) comes out and starts bashing the economy. Look at the leaders of the party. Everytime the market starts to turn up, or good ecomonic indicators come out, then what happens. Tommy, Bore, and Dick all start saying how bad the economy is.

Sorry,
Rant over

5. ### mcrain macrumors 68000

Joined:
Feb 8, 2002
Location:
Illinois
#5
Originally posted by Backtothemac

The tax cuts is not what has evaporated the surpluss, that is the war on terror that has done that. Actually, I didn't say the tax cut evaporated the surpluss. I said the tax cut contributed to the stock market woes, and because in order to justify a tax cut, they had to say we were going to have all this extra money, they made assumptions based on stock market and economy growth that wasn't going to change. Thus, when the market changed, the estimates couldn't be met. I wish people would ask Tommy why we have 58 open federal judge positions right now. Wow, funny you should mention that, but I seem to recall many, many judges being nominated by Clinton who couldn't get a hearing before congress for appointment. Why? Maybe congress was more worried about impeachment than the federal bench. Maybe? Maybe not. Why can they not give the administration what it needs to be successful on the war and on the economy. What would that be? Half of what W does, and most of what he wants to do, he does in secret. What does he need? He has been given money for the war, but we don't really know what's going on. It's got to be tough fighting a noun. On the economy, I don't trust W any farther than I could throw him. Same goes for Cheney. If the economy is going to come back, it is going to do it on its own.

What makes me sick is that the other day with a 488 point rally, Bore (sorry Gore) comes out and starts bashing the economy. Look at the leaders of the party. Everytime the market starts to turn up, or good ecomonic indicators come out, then what happens. Tommy, Bore, and Dick all start saying how bad the economy is. Ok, the market drops thousands of points, and comes back on one rally (there were some stocks that were undervalued), and you think the economy is good?

Sorry,
Rant over
Quite alright. How's the wife and mini-BTTM? All well I hope.

6. ### big macrumors 65816

Joined:
Feb 20, 2002
#6
>so the nine sat down and ate without him. But when it came time to pay the bill, they discovered something important. They were \$52 short!

ummm if the tenth man did not show up to dinner, then the total bill would have been \$71, not \$80. Do the math from there

7. ### jefhatfield Retired

Joined:
Jul 9, 2000
#7
very interesting!

depending on what side of the fence you are on, both arguments are correct

but if i were a gazillionaire, i would have no problem treating everybody to lunch...every time

heck, i could buy the restaurant or chain if i wanted to!!!

bill gates does not need all the money he has so that's why he has given some away and he does not expect joe citizen to give away 23 billion over the next few decades...he can afford it so he gives it away

after its all said and done, gates will still be a multi-billionaire

it's all in the scale..that's why i am a democrat

8. ### mcrain macrumors 68000

Joined:
Feb 8, 2002
Location:
Illinois
#8
He doesn't give his money away because he likes to, but because by giving it away, he gets deductions that allow him to keep more of his money.

9. ### backspinner macrumors 6502a

Joined:
Apr 29, 2002
Location:
Eindhoven
#9
ummm if the tenth man did not show up to dinner, then the total bill would have been \$71, not \$80. Do the math from there

\$72?

10. ### big macrumors 65816

Joined:
Feb 20, 2002
#10
>72?

\$80 / 9 = 8.8888888 (cost of each meal)
\$80 - 8.888888=\$71.11111 (total cost of meals)

so really we are both wrong. <sarcasm>damn Mac cant add</sarcasm>

11. ### backspinner macrumors 6502a

Joined:
Apr 29, 2002
Location:
Eindhoven
#11
\$80 / 9 = 8.8888888 (cost of each meal)

The only way I can understand it is \$80 / 10 = \$8 a meal

12. ### big macrumors 65816

Joined:
Feb 20, 2002
#12
you see, at the last meal, when the tenth man did not show up, there were 9 people. so when Backtothemac posted about the last meal, there being 9 people, and them being \$52 short, I was just originally trying to correct him on that price...

does anyone else get it, or do I have to do the full math?

13. ### Taft macrumors 65816

Joined:
Jan 31, 2002
Location:
Chicago
#13
If there were 10 people and one person left, that leaves 9 people to pick up an 80 dollar check.

80 / 9 = 8.88889

Taft

14. ### backspinner macrumors 6502a

Joined:
Apr 29, 2002
Location:
Eindhoven
#14
Sorry, I'm from Europe where we pay for ourself

So I thought the bill for 10 people is \$80, that makes \$8 a meal. If one does not show up, one meal less is consumed. So you don't have to pay for that than. Never understood your way of tipping, either.

15. ### big macrumors 65816

Joined:
Feb 20, 2002
#15
>taft

ummmm yeah...I mentioned that
Say, can we just erase the last like 12 posts that are competely off topic...

does no one else see that after the tenth man did not eat dinner, the others could not have been left owing the same \$52 the tenth man would have paid? because his meal would have been included in that.

sooooo they would have been left owing some \$40 something dollers, ecause there were nine of them! (I just don't want to do the math)

16. ### big macrumors 65816

Joined:
Feb 20, 2002
#16
>Never understood your way of tipping, either.

5% if the waitress is good.

More than that if she's cute!

17. ### big macrumors 65816

Joined:
Feb 20, 2002
#17
sorry for the double post, though you can not very well order a beer or just a coffee and leave a nickel on the table as the tip...

having someone bring you a coffee prety much deserves at least a dollar (effectively doubling the cost of your jave, though you have to pay for service)

18. ### zarathustra macrumors 6502a

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#18
I do believe that the example used was to demonstrate *FEDERAL* spending. All the other taxes you list, are for the benefit of your state - to finance roads, schools, local projects, etc.

I love it when Democrats get bent out of shape that there is too much given back to the "rich" and the "poor" are taxed heavier, when it's the Democratic agenda to create social programs and bureaucratic position that cost us so much...

19. ### LethalWolfe macrumors G3

Joined:
Jan 11, 2002
Location:
Los Angeles
#19
Wait, wait wait... Why does the cost of the meal have to go down w/o the 10th man eating? What if they go to someplace and share a really big \$100 pizza?

Back on topic, the example is an over simplification of the US tax system, but most people show an extreme inablity to grasp the sliding scale tax system we have now so an over simplification is a good place to start IMO.

Lethal

20. ### mcrain macrumors 68000

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Location:
Illinois
#20
Of course the example was only about the FEDERAL tax system. That was my point. If you put blinders on, you could look at the tax cut proposed by the Republicans and almost think it was really fair, however, if you take the blinders off, and look at taxation as a whole, the tax cut ends up creating a slightly regressive tax system. In other words, a system where the lower income levels pay a higher share of their overall income in taxes than the higher income brackets.

As for your comment about the Dems spending money, sorry, but you're an idiot. Both sides spend lots and lots of money. Every dollar ever spent on social programs ever proposed in the history of mankind by the democrats is equaled or exceeded by dollars spent by the Republicans.

If the Dems "agenda" is to spend money, what's the republican agenda? Let the Enrons of the world rape and pillage the rest of us for a profit? Spend every penny on the military? Let the poor starve? Let the roads fall apart? Let the old people die, they're going to anyway?

I'm not that naive, I sure as heck hope you aren't.

21. ### big macrumors 65816

Joined:
Feb 20, 2002
#21
>Why does the cost of the meal have to go down w/o the 10th man eating?

you are correct, the final meal never did stipulate that they ate at the same restaurant, though I think your just being difficult!

>All the other taxes you list, are for the benefit of your state - to finance roads, schools, local projects, etc.

If we could build our towns and communities correctly, there would be far less taxes. using just some of the ideals in New Urbanism, a walkable community is very important. you wouldn't have to drive to buy milk one satuday afternoon (waisting gas money, on huge roads)

that builds up! you'd save a lot of taxes on less roads and gas!

22. ### Taft macrumors 65816

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Location:
Chicago
#22
Great post!!

Both sides spend tons of money on bullshyat. The difference is what kind of bullshyat they spend it on.

I've often found it remarkable how people who should least like the conservatives' financial policies vote for them anyway. The people at the bottom of the financial ladder should be doing everything in their power to prevent conservatives from being elected out of their own interests. And yet they don't.

Its because often people will vote for a candidate based on the issues that aren't going to affect their lives at all. People will vote based on their stance on same-sex marriages, abortions, the religion of the candidate, etc., etc. Really, the things that will effect the majority of the people the most will be a candidates economic and social aide stances.

Maybe the candidates are just able to spin their economic policies so that poor-Joe-voter thinks they won't matter.

In any case, I will never understand how a person living under middle class would vote for a big-business/feed-the-rich type of candidate.

Taft

23. ### mcrain macrumors 68000

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Location:
Illinois
#23
The most amazing thing I have seen is not the way in which the Republicans made Bill Clinton into the personification of no morals, but rather the way in which middle and southern America, especially the Bible belt, threw aside any affiliation to candidates who promised farm assistance, welfare, food aid, etc... for a candidate who was against Clinton. Many people vote Republican because they didn't like Clinton's morals. The right to lifers were also attracted to candidates who campaigned that someone else's morals were wrong rather than the candidate who "promised" things that would have been of greater assistance.

I have my personal preferences and opinions on the priorities of spending, and what things are more important than others, however, I know that the beauty of the American System is that there are people out there who believe the exact opposite. For every zealot, there's an opposite zealot. For every moderate, there's a moderate on the other side. This prevents any sort of major shifts in policy or procedure.

24. ### Taft macrumors 65816

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Chicago
#24
But what if something so shaking occurs which effects people so violently, that they stop thinking and just start acting. Its these type of situations where the zealots and moderates on one side dissappear and the other side reigns free.

I think we saw a small bit of this in the wake of Sept 11. When a lot people are scared its hard to predict what they will do. Its this kind of situation that scares me the most.

Taft

25. ### zarathustra macrumors 6502a

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#25
I am sorry to see you have no class - there is no need for you to throw your names around - I am not any more an idiot than you are for believing in something. Please reserve your insults and do not let them out. How do you expect "the other side" to take you seriously if you go into a foam-in-the-mouth republican bashing. I would take your points and consider them, but instead I get the feeling you have no desire to listen to me. You make up things (Every dollar ever spent on social programs ever proposed in the history of mankind by the democrats is equaled or exceeded by dollars spent by the Republicans) - unless you have proof for this.

You make it sound like republicans don't give a rodents behind for anything. Because of people like you I consider myself more a republican than a democrat, because attitudes like yours make me sick in the stomach. As a rule, I want less government. And in ideal society I would not want a military. And in an ideal society I would love to get rid of fossil fuels and replace them with hydrogen cells. As an ideal society I would sit in a mountain cabin and munch on granola bars while I sing Kumbaya. In an ideal society.. well I could go on.

This is not an ideal society and we have to balance all aspects of our lives. You are no more right than I am - I hope you can agree that Democrats are leaning towards socialism and republicans embrace capitalism. (I have not mentioned third parties for simplicity's sake) But remember they both believe in the constitution and democracy.

When corruption gets in the picture, it does not matter which party they belong to. So in essence you equated republicans with corrupt polititians - there is just as many on the Democratic side.

All I said in my last post is that since Democrats emphasize social programs , there is a bill to be paid. Granted the republican party spends quite a bit on home defense and the military. When there is a need for subsidized this and that, it will have to come out of someone's pocket.

In Europe there is "free" medical service, higher education, 5 weeks vacation and so on in practically every country. There is also 50-60% income tax and 23% sales tax. We could get into a discussion about the quality of life based on these figures, but it's a preference of likes.

I have experienced communism and socialism, and there is still plenty of corruption to make people mad.

Rant over.