Thread: How Taxes Work
#1 How Taxes Work11-11-2011, 09:42 PM
How taxes work - 10 Men Go To Dinner
Suppose that every day, ten men go out for dinner and the bill for all 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 like they do now with the present income tax structure.
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 of the bill.
So that is what the ten men decide 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 all are such good customers I am going to reduce the cost of your daily meal by $20". Dinner for the 10 men now costs just $80...
The group still wanted to pay the bill the same way that they paid their taxes so the first four men were unaffected. They would still eat for free. But what about the other six men -- the Paying customers? How could they divide the $20 windfall so that everybody 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 and sixth man would each end up being paid to eat their meal...
So, the restaurant owner suggested it would be fair to reduce each mans bill roughly the same amount; and proceeded to work out the amounts each man would pay.
The fifth, like the first four now paid nothing (100% savings).
The sixth man now paid $2 instead of $3 (33% savings)
The seventh man now paid $5 instead of $7 (28% savings)
The eight man now paid $9 instead of $12 (25% savings)
The ninth man now paid $14 instead of $18 (22% savings)
The tenth man now paid $49 instead of $59 (16% savings)
Each of the six was better off then 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. Its 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 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 man and beat him up...
The next night the Tenth man did not 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 the bill!
And that Boys & 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 might not show up anymore. In fact, they might start eating overseas where the atmosphere is somewhat friendlier? Mike Quinn
http://www.warroom.com/dinner_taxes.phpThe difference between pigs and people is that when they tell you you're cured it isn't a good thing.
11-11-2011, 10:10 PM
Anyone want to bet that Wei never comments in this thread?
11-12-2011, 01:07 PM
How much did each man eat? or, what was the cost of each man's dinner?Originally Posted by Adam Smith - Wealth of Nations
11-12-2011, 01:11 PM
In terms of total net worth, the cost of the dinner of the top 2 men alone was $85
The other 8 men ate dinners that only costed them $15 combined. They must have only had sodas and no meals, while the top two guys had steaks and lobster.
The cost of the dinner of the 1 man paying the most, was $73.
The one man's dinner costs $73 on his own, and he pays $59 of the bill. So if he didn't show up the next day, they'd come out $14 ahead.
Why should the guys ordering only a soda and no food have to pay the same as the guys ordering lobsters and steak?
Last edited by Wei Wu Wei; 11-12-2011 at 01:13 PM.Originally Posted by Adam Smith - Wealth of Nations
11-12-2011, 01:52 PM
The only people able to afford a deposit and be able to move out were the top few guys who were ordering the expensive food and paying for the bulk of it. They are quite happy because they lived in luxury condos several floors above the restaurant. They also worked at the resturant, so they wanted to live close, but these people were managers,HR reps, and owners. Looking to improve their costumer base, and express how much they enjoy the current arrangement, they purchased advertisements and ran them all over town.
The advertisements show smiling chefs and satisfied costumers, and proclaim that you should come eat at this resturant, where EVERYONE is happy. Those advertisements are on billboards, busses, and even on banners draped along the outside of the resturant. Interestingly enough, those banners were draped right over the windows of the storage closet where the 5 workers sleep every night.
They're not happy, but they can't afford advertisements to express it, hell they cannot even afford to move out of the storage closet or even to buy food at dinner while the owners and managers enjoy lobsters.
So, a costumer walk by, look at the advertisements, and accept them, because they were never taught to think critically and frankly don't care about the workers, the cooks, the bussers, the waiters. That night, he goes into the resturant, is prepared a delicious meal by the cook, has his table prepared by a busser and is waited on by a waiter and a bartender, has a wonderful time, and tells all his friends to come to the place where everyone is happy.Originally Posted by Adam Smith - Wealth of Nations
11-12-2011, 07:20 PM
OTOH, it does provide some insights into your psychological issues.
Get help. Seriously.
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