How our tax system works

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    How our tax system works


    Funny analogy I found that explains our tax system quite well.....Enjoy!



    Suppose that every day, ten men go out for beer 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.
    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 men drank in the bar 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 beer by $20. Drinks for the ten 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 drink for free. What happens to the other six men – the paying customers? How could they divide the $20 windfall so that everyone would get his ‘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 drink his beer. So, the bar 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 pay $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 drink 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 I!’

    ‘That’s true!!’ shouted the seventh man. ‘Why should he get $10 back when I got only two? 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, and agreed the following November they would vote to raise his cost of the beer.

    The next night the tenth man didn’t show up for drinks, so the nine sat down and had beers 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 anymore. In fact, they might start drinking overseas where the atmosphere is somewhat friendlier.

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    Awesome post. FAIRTAX.ORG
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    I have touted the Fair Tax Act for quite awhile now. It will never happen since this would effectively get those 5 people off the government dole.
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    Amen on the fair tax. Keeps it simple and everyone contributes. But yeah, the bottom 5 will soon be the majority of voters so it will never see the light of day.
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    I agree with this post.
    That is why I no longer wish to drink at that bar.
    I now drink at another bar that appreciates my buisness and treats me fairly.

    More and more people are checking out diff bars.
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    ban the income tax,

    in a free society, man should own his own labor.

    when the government owns a percentage of our labor, we are downgraded from free to serfs/slaves.

    the founding fathers did not have income tax in mind, this was created using trickery in the early 1900's,

    so i say do not support the "fair tax," as that is the same as supporting slavery.

    instead support the free man, and let us all own our labor.
    나는 2000년 10월 매들린 올브라이트 전 미 국무장관 매들린 사랑, 그 중 한 뜨거운 젠장!
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    Quote Originally Posted by ax1 View Post
    ban the income tax,

    in a free society, man should own his own labor.

    when the government owns a percentage of our labor, we are downgraded from free to serfs/slaves.

    Tthe founding fathers did not have income tax in mind, this was created using trickery in the early 1900's,

    so i say do not support the "fair tax," as that is the same as supporting slavery.

    instead support the free man, and let us all own our labor.
    Explain what you mean about the fair tax fitting your description. With the Fair Tax, you get to keep your labor. The ONLY tax you pay is when you buy a New product. It abolishes the IRS and all the forms of tax.
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    I meant to say it abolishes INCOME tax. You are only taxed on what you spend, not what you earn. So if you are a hermit that doesn't buy anything you don't pay taxes.
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    Quote Originally Posted by youngandfree View Post
    Explain what you mean about the fair tax fitting your description. With the Fair Tax, you get to keep your labor. The ONLY tax you pay is when you buy a New product. It abolishes the IRS and all the forms of tax.
    i have to read better, and honestly i didnt read much of the first post as i was in a hurry.

    i was confusing it with flat tax which so many people say is fair. if above is true than its a great thing!
    나는 2000년 10월 매들린 올브라이트 전 미 국무장관 매들린 사랑, 그 중 한 뜨거운 젠장!
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    Go to fairtax.org. Straight from the horses mouth what the fairtax is all about. The libs try to pay t it as an ADDITIONAL 23% sales tax on top of everything else. This is PATENTLY FALSE! It abolishes the IRS and replaces the social security tax, medicare tax, income tax, etc and replaces them all with a sales tax only on NEW goods and services. Check it out and spread the word.
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    Quote Originally Posted by youngandfree View Post
    Go to fairtax.org. Straight from the horses mouth what the fairtax is all about. The libs try to pay t it as an ADDITIONAL 23% sales tax on top of everything else. This is PATENTLY FALSE! It abolishes the IRS and replaces the social security tax, medicare tax, income tax, etc and replaces them all with a sales tax only on NEW goods and services. Check it out and spread the word.
    Man, just think the savings America would see by abolishing the IRS, and then your taxes would be done on a notecard with 10 questions. Now you are also saving tax payers every year from having to have a CPA do their taxes.

    But man, with the spending this admin is going through right now... I bet the 23% now needs to be adjusted.
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    Quote Originally Posted by ax1 View Post
    i have to read better, and honestly i didnt read much of the first post as i was in a hurry.

    i was confusing it with flat tax which so many people say is fair. if above is true than its a great thing!
    Fair Tax = Consumption based tax
    Flat Tax = Income tax at a flat rate

    I'm an advocate of the Fair Tax. I hate that it's referred to as the Fair Tax though.
    RcB Since 09-06-2011 20:55 EST, Post 49
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    Quote Originally Posted by iron fists View Post
    fair tax... end the free rides off the poor..they all got extra money for drugs and alcohol and tobacco so let them pay some taxes too. besides..since when did living for free get so hard???
    I agree with that notion up to a certain point. There shouldn't be a continuous/excessive flow of tax dollars going towards entitlement programs. Families that immigrate here, may require some form of social service in order to fulfill the promise of the American Dream, which requires an education, which they may not be able to afford. In the long run they will end up paying higher taxes, since they will eventually become part of a skilled workforce. Again, welfare or social programs should inherently have limits, but upfront they serve an immediate purpose.
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    Quote Originally Posted by southpaw23 View Post
    I agree with that notion up to a certain point. There shouldn't be a continuous/excessive flow of tax dollars going towards entitlement programs. Families that immigrate here, may require some form of social service in order to fulfill the promise of the American Dream, which requires an education, which they may not be able to afford. In the long run they will end up paying higher taxes, since they will eventually become part of a skilled workforce. Again, welfare or social programs should inherently have limits, but upfront they serve an immediate purpose.
    If only this was true. If that was the case, more than only 50% of the tax paying age would be paying taxes today.
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    Can an evil as vile as the IRS really be removed? lol. Fair tax though, only for sales? I am quite sure they would still manipulate and abuse it and twist it to their means. Not to mention it will be a 40% sales tax.
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    Quote Originally Posted by AtlasEnduring View Post
    Can an evil as vile as the IRS really be removed? lol. Fair tax though, only for sales? I am quite sure they would still manipulate and abuse it and twist it to their means. Not to mention it will be a 40% sales tax.
    23%.

    IRS can be removed if you read some of Ron Pauls stuff... it would be harder to manipulate than the overbloated beuacracy we have now, but not impossible of course.
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    we are going the opposite direction,

    lets not forget they just expanded the IRS by 10,000 members just to enforce mandatory health insurance products. and yes they will all be fully armed to the teeth and combat trained.

    its in the bill if you dont believe me, in 1 of the thousands of pages.
    나는 2000년 10월 매들린 올브라이트 전 미 국무장관 매들린 사랑, 그 중 한 뜨거운 젠장!
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    Quote Originally Posted by ax1 View Post
    we are going the opposite direction,

    lets not forget they just expanded the IRS by 10,000 members just to enforce mandatory health insurance products. and yes they will all be fully armed to the teeth and combat trained.

    its in the bill if you dont believe me, in 1 of the thousands of pages.
    How do people sit idle and let this stuff go through without voicing their opposition? Every one lives with a heart of defeat and submission anymore.
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    I am all for Ron Paul , that would be the best thing to happen to our country, against the fed and the irs !!!
    If only people voted with their minds instead of their eyes and ears.

    In 08 I payed just under 4grand in taxes
    but in 09
    i payed over 11 grand ....not including the 6 grand i pay every year for social security.

    This gov of ours punishes its ppl for doing well.
  

  
 

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