The Bush Tax cuts - How they really work:
Many times Politicians have exclaimed: "It's just a tax cut for the rich!"
and that 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 $7.
The eighth $12.
The ninth $18.
The tenth man (the richest) would pay $59.

So, the ten men ate dinner in the same 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 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.

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Irish---Better to be dead & cool,then alive & uncool!
(Harley Davidson & the Marlboro Man)

~laughing and nodding in agreement~

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Strength in depth

I believe your most attractive features are your heart and soul

Yes, and yes. And when that tenth man chooses to spend HIS money offshore, he'll be roundly castigated. Keeps peoples thoughts away from dangerous shoals. Like just what IS being done with our tax monies.

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Cholesterol; it's not just for breakfast anymore.

It's not like I didn't understand the principal application in the first place....but I must say that whoever clarified it (in simple terms that *the simple mind* can understand.....geezzzz!*) must have been feeling guilty about something!!

LOL!

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Minds are like parachutes. They only work when they are open.

~Thomas Dewar~

I got that in an e-mail,from my retired Marine Officer uncle,in Conn.It was,mainly,to show,that nomatter what, the circumstances,
someone will always "bitch" or be unhappy! Irish
P.S.The grass is always greener,on the other side of the fence!

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Irish---Better to be dead & cool,then alive & uncool!
(Harley Davidson & the Marlboro Man)

Well, Irish, your story is nice, but it doesn't have ANYTHING to do with reality.

You, see, how you claim it works is only part of the story. And, by leaving out the rest of it, you vastly misrepresent where the tax burden falls.

If we continue the analogy, we would find the resturant owner saying:
"Well, Rich Man, since you're such a good customer, and I want more business, I'm going to give you a discount. Let's say $10 off your portion of the bill."

This is BEFORE any of the other discounts. So, now he's paying $49, which is cut to $39 after the general bill reduction. And YES, the tax code does work this way.

To continue the analogy, let's say each of the customers have something to do with the running of the resturant-farm produce, lanundry and/or dishwashing services, furniture, dry good supplies, that sort of thing.

The restuarant owner says "Gee, I have to buy my supplies and services somewhere. In principle, I can make the most money if I please the richest sorts of people, so I'll make sure to steer my business towards the supplies and services owned by the richest of my costomers." So, he hires the poorest four to wash his dishes and do his lanudry. OK, great, now they get to eat for free, and still make a little bit of money for their other expenses. You with me so far? But he still has to make a profit, so he mkaes damn sure they get paid a paltry amount. People five, six and seven might be the waitrons, who are making a little bit of money, but still not enough to be damaging to the resaurant's profits. This is an absolute rule, or the systems goes kaput. People eight and nine own food distributors, so they are getting their own piece of the pie for now. Person ten, it turns out, owns furniture, paper, metal, and glass factories, as well as many of the farms that distributors eight and nine are buying from. Making the biggest share of the pie of all.

Then, the resturant owner finds he's starting to not make as much profit as he used to. In capitalistic terms, he is "losing" money. He's got to make up his profits somewhere, and decides that if he can't borrow money (run a deficit business), he's going to have to raise income. Can't raise the price of meals (tax increase, in this analogy), that would drive his best customers away.

Ah, he says, "user fees", "surcharges", that sort of thing. Ah, everybody, and this means everybody, including employees, must start using the pay toilets. Then there's a napkin fee. A surcharge for using the chairs. A cover fee for using the restaurant in the first place. A toothpick surcharge. YOu should get teh picture by now.

Not one of these fees or surcharges takes into account progressive income. In this analogy, it's going to amount to just about the weekly income of the poorest four, who are employed by the restaruant owner. They are barely able to get by, no matter how hard they work. The middle income people are grumbling, but they can't afford to go eat at someplace in the Carribean or Europe, so they just grin and bear it. The richest man, well, he might go some other place occasionally, but hey, he's making the most money off this arrangement, and living pertty comfortably off what he's makijng, too, so he has no reason to fuck with it.

You bet your sweet ass our tax system exploits the poorest and middle income people. That's how our tax system REALLY works.

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On the kinkometer, my kink measures as a sine wave.

gekkogecko

you do point out some of the problems that do occur in reality...but you ended up going to the opposite extreme that Irish was trying to represent. I think that the US is somewhere in that grey middle ground between your two examples.

I am big favorer of tax cuts, but do not think in today's political spectrum of the "low" class getting them too that they work. The biggest flaw in your theory gek is your last statement

"You bet your sweet ass our tax system exploits the poorest and middle income people. That's how our tax system REALLY works."

while I do believe that the middle income brackets do have an unfair burden With them sitting back while the lower brackets get their "bonuses" and the higher brackets get their "tax breaks" the lower bracket is by no means exploited.

If a lower income person or family does their taxes correctly they can easily get back 5 times as much as they pay in. My cousin, one of those many non-workers out there, who with her 2 kids chooses not to work much (personal choice of hers created by the "welfare" mentality...a whole other subject), paid in $840 to the IRS last year. When a few weeks ago she was bragging to me how she with the various family tax credits got a refund check back for $5,840....

Last time I checked a refund was a return on something you paid...must be the new math...

So if you figure this into an average middle income person (like myself) in order to take home that....I would have to make between 9-10,000 dollars before taxes... that just doesnt jive to me.

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Love...the slowest form of suicide.

This & another thread that I posted last night,(both from e-mails,
sent to me)have convinced me of one thing.Everyone wants to
argue about or analize.eveything that is submitted.As Aqua said,
in another thread-There are other websites devoted to this.The-
"Devil may care" & joke with other members of pixies,is gone
Irish
(Returns to lurking status,for awhile)
P.S.Suggestion-Everyone,lighten up!

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Irish---Better to be dead & cool,then alive & uncool!
(Harley Davidson & the Marlboro Man)

Irish have come to this conclusion a couple of month ago. So you have not seen me around as much, plus I had some trouble with the Blaster Worm. But I do still like to see if there is any interesting threads. Not many of those either. See you down the road.

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Scarecrow,

Sorry to see less of you. What do you consider interesting?

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Eudaimonia