Progressive Tax Systems Explained Through Beer

[CaptainPlanet]

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. But what about 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.

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!

[JooX]

Thats so deep I think I can feel your balls at the base of my spine.






:omg:

[DC Thug]

the problem with that situation that it requires us to unquestioningly accept the conditions provided.

if i may interject with a summarized chris rock quote:

If you're making $100,000 and she wants half, you're not starving on $50,000
but
If you're making $30,000 and she wants $15,000
you might have to kill a bitch

The wealthy can afford the big hit on taxes, but they get some of the biggest breaks (re: the need for the alternative minimum tax). Second, the middle class by far pays the majority of government inlays, they should get a better break. Third, the poor pay the least and even get money back through EIC (earned income credit).

This is what happens when you take a goddamn tax course while reading something that was supposed to be funny. Taxes aren't funny, yo.

[PlaneswalkerX]

What's your point, CP? That the rich are being taxed unfairly?

[CaptainPlanet]

Thats so deep I think I can feel your balls at the base of my spine.

:omg:

I love you too sweetheart ;)


the problem with that situation that it requires us to unquestioningly accept the conditions provided.

if i may interject with a summarized chris rock quote:

If you're making $100,000 and she wants half, you're not starving on $50,000
but
If you're making $30,000 and she wants $15,000
you might have to kill a bitch

The wealthy can afford the big hit on taxes, but they get some of the biggest breaks (re: the need for the alternative minimum tax). Second, the middle class by far pays the majority of government inlays, they should get a better break. Third, the poor pay the least and even get money back through EIC (earned income credit).

This is what happens when you take a goddamn tax course while reading something that was supposed to be funny. Taxes aren't funny, yo.

The rich, not the middle class, pay the majority of income taxes. It's not even close. The top 10% pay 68% of all income tax.

I don't think it's funny either, it is what it is...


What's your point, CP? That the rich are being taxed unfairly?

I just thought it was interesting analogy, especially the part about how people interpret and react to a cut in taxes

[DC Thug]

The rich, not the middle class, pay the majority of income taxes. It's not even close. The top 10% pay 68% of all income tax.


Now I'm going to categorize what you just said.

Yes, as a group of individuals, the most wealthy Americans pay the highest bracket in the IRS tax code.

However

When taken the number of individuals who earn over $250,000 a year, which according to Businessweek, is only the top 2% of all Americans (http://www.businessweek.com (http://www.businessweek.com/debateroom/archives/2008/06/250000_isnt_ric.html)), that number pales in comparison to the individuals who state they are in the "middle class", or earning approximately $25,000 to $100,000 (www.csmonitor.com (http://www.csmonitor.com/2005/0510/p09s01-codc.html)). Those numbers range from 25%-75%. According to the US Census Bureau, the median salary in the US is approximately $55,000, which is well under $250,000 (http://www.census.gov/ (http://www.census.gov/Press-Release/www/releases/archives/income_wealth/012528.html)).

And another thing, you claim that the most wealthy pay "68% of all income tax." What do you mean by that? 68% of their income? 68% of revenue brought in by the IRS? 68% doesn't jive with the current tax bracket system as set up by the IRS, so I'm confused to your statement. Please clarify.


lol don't you love tax?

[Raidenator]

I think the point of this was to point out that people are fucking retarded and need to learn that a progressive tax does not fuck everyone over.

[mousewallrat]

I'll never understand why peeps think the rich need to be financially assfucked in order to make them all poor...in the name of fairness. I've never been hired to do a job by a poor person, and I'd love to be rich. It's not like it makes you automatically evil or something.

[DC Thug]

I'll never understand why peeps think the rich need to be financially assfucked in order to make them all poor...in the name of fairness. I've never been hired to do a job by a poor person, and I'd love to be rich. It's not like it makes you automatically evil or something.

might want to read up on this thread

http://www.filecabi.net/forum/showthread.php?t=22683

just a few of my favorite things. like raindrops on roses and whiskers on kittens. wealthy executives spending gobs of money and taxpayers bailing them out. brown paper packages tied up with string.

etc etc etc

[mousewallrat]

Yeah, DC, I heard about that on the radio yesterday...and whoever in that company decided to do that ought to be arrested and charged for misappropriation of public funds. Since we own so much of their company, it's public money they're using now. But I mean that whenever there is a thread about progerssive taxation here, it's always loaded with comments about needing to tax those evil rich bastards more and more. Few of the 'rich' are heads of big corporations. I work in La Jolla, and 100% of my clientele is at minimum a millionaire. All of them. They pay a shitload of property taxes, a ton of income taxes, and pay me a wage I couldn't get in Hicktown, USA. Most of them have lost a boatload of money on their investments too, in this falling market. Those idiots on Wall Street are the evil ones, not the 'average' guy with a bit of money socked away.

[Smilecabi.net]

Very well laid out... Kudos!

[rubicks]

might want to read up on this thread

http://www.filecabi.net/forum/showthread.php?t=22683

just a few of my favorite things. like raindrops on roses and whiskers on kittens. wealthy executives spending gobs of money and taxpayers bailing them out. brown paper packages tied up with string.

etc etc etc
dont forget dogs bite and bees sting:thumb:

[CaptainPlanet]

Yes, as a group of individuals, the most wealthy Americans pay the highest bracket in the IRS tax code.

The most wealthy are in the highest bracket and pay the highest tax rates, no disagreement there :thumb:


However

When taken the number of individuals who earn over $250,000 a year, which according to Businessweek, is only the top 2% of all Americans (http://www.businessweek.com (http://www.businessweek.com/debateroom/archives/2008/06/250000_isnt_ric.html)), that number pales in comparison to the individuals who state they are in the "middle class", or earning approximately $25,000 to $100,000 (www.csmonitor.com (http://www.csmonitor.com/2005/0510/p09s01-codc.html)). Those numbers range from 25%-75%. According to the US Census Bureau, the median salary in the US is approximately $55,000, which is well under $250,000 (http://www.census.gov/ (http://www.census.gov/Press-Release/www/releases/archives/income_wealth/012528.html))

$250k is Obama's cut-off for "Middle-class", McCain's is somewhere in the $500k+ range. I was using the lower of the two, which I think is still ridiculous. Personally I probably think $100k is a decent number, BUT, $100k in, lets say, Arkansas is a lot more upper class than $100k in NYC. There's no real good definition for this term. That said, no disagreement that there are more people that make between $25k and $100k


And another thing, you claim that the most wealthy pay "68% of all income tax." What do you mean by that? 68% of their income? 68% of revenue brought in by the IRS? 68% doesn't jive with the current tax bracket system as set up by the IRS, so I'm confused to your statement. Please clarify.

The info comes from this IRS publication - http://www.irs.gov/pub/irs-soi/04in05tr.xls - which shows up to 2004. Towards the bottom it shows Income Tax Share as a percentage broken down across the various top percentages of filers. In 2004 the top 1% paid 36.89% of the income tax collected by the IRS, the top 5% 57.13%, the top 10% 68.19%, etc. That spreadsheet also shows the floor for the % brackets, with the cutoff for the top 10% being right at $99k.


lol don't you love tax?

I'd rather talk about them than pay em :rofl:

[YourAfuckingMoron]

might want to read up on this thread

http://www.filecabi.net/forum/showthread.php?t=22683

just a few of my favorite things. like raindrops on roses and whiskers on kittens. wealthy executives spending gobs of money and taxpayers bailing them out. brown paper packages tied up with string.

etc etc etc

IT BUGS THE SHIT OUT OF ME WHEN PEOPLE POINT TO SOME CEO MAKING MILLIONS AND SAY THATS A REASON THE RICH SHOULD BE TAXED. THAT'S MAYBE 1% OF PEOPLE THAT WOULD BE CONSIDERED "RICH". OBAMA'S TAX PLAN IS SUCH A JOKE. HE ALSO WANTS TO REMOVE THE CAP ON SOCIAL SECURITY TAX FOR PEOPLE MAKING OVER 250K A YEAR. THAT WOULD MEAN SOMEONE WHO MAKES 250K A YEAR WILL BE GIVING 56% OF EVERY DOLLAR HE MAKES TO THE GOVERNMENT JUST FOR FEDERAL INCOME AND SOCIAL SECURITY TAXES ALONE. THAT'S THE MOST UNFAIR BS I'VE EVER HEAD OF. THAT WOULD ALSO BE THE 2ND HIGHEST TAX IN THE WORLD. ALL SO SOME CRACKHEAD CAN AFFORD HEALTHCARE. YOU KNOW WHY HEALTHCARE COSTS SO MUCH? CAUSE IN THE US ANY FUCKING IDIOT CAN SUE FOR ANYTHING.

[DC Thug]

IT BUGS THE SHIT OUT OF ME WHEN PEOPLE POINT TO SOME CEO MAKING MILLIONS AND SAY THATS A REASON THE RICH SHOULD BE TAXED. THAT'S MAYBE 1% OF PEOPLE THAT WOULD BE CONSIDERED "RICH". OBAMA'S TAX PLAN IS SUCH A JOKE. HE ALSO WANTS TO REMOVE THE CAP ON SOCIAL SECURITY TAX FOR PEOPLE MAKING OVER 250K A YEAR. THAT WOULD MEAN SOMEONE WHO MAKES 250K A YEAR WILL BE GIVING 56% OF EVERY DOLLAR HE MAKES TO THE GOVERNMENT JUST FOR FEDERAL INCOME AND SOCIAL SECURITY TAXES ALONE. THAT'S THE MOST UNFAIR BS I'VE EVER HEAD OF. THAT WOULD ALSO BE THE 2ND HIGHEST TAX IN THE WORLD. ALL SO SOME CRACKHEAD CAN AFFORD HEALTHCARE. YOU KNOW WHY HEALTHCARE COSTS SO MUCH? CAUSE IN THE US ANY FUCKING IDIOT CAN SUE FOR ANYTHING.


uuhhh so many errors in this post

first, SS was created for the elderly, not "crackhead(s)"

maybe you're thinking of medicaid? if so, that's split between the feds and the states and eligibility is based upon need.

health care doesn't cost so much because of tort lawsuits. tort insurance is low in comparison to other costs. it's a complicated relationship between insurance companies, the pharmaceutical industry, and doctors who all make a profit on not curing the disease, but managing the illness.

and on the tax, re: my example from Chris Rock

Some dude making over $250,000 a year, isn't starving with the taxes put upon them. Britney Spears and her ilk should be taxed to the gills for all I care.

[Willow]

Let the man who has been buying the beer suddenly be the one getting the free beer and see how his tune changes.

[YourAfuckingMoron]

uuhhh so many errors in this post

first, SS was created for the elderly, not "crackhead(s)"

maybe you're thinking of medicaid? if so, that's split between the feds and the states and eligibility is based upon need.

health care doesn't cost so much because of tort lawsuits. tort insurance is low in comparison to other costs. it's a complicated relationship between insurance companies, the pharmaceutical industry, and doctors who all make a profit on not curing the disease, but managing the illness.

and on the tax, re: my example from Chris Rock

Some dude making over $250,000 a year, isn't starving with the taxes put upon them. Britney Spears and her ilk should be taxed to the gills for all I care.

ROFL IM NOT TALKING ABOUT SS AND MEDICARE. I'M TALKING ABOUT OBAMA'S PLAN FOR SOCIALIZING HEALTH CARE.

WHAT DO YOU KNOW ABOUT THOSE RELATIONSHIPS? NOT A GOD DAMN THING.

SOME DUDE MAKING 50K A YEAR ISN'T STARVING EITHER... DON'T GIVE ME THAT B.S. JUST BECAUSE SOMEONE MAKES MORE MONEY DOESN'T MEAN THEY SHOULD PAY FOR EVERYONE ELSE'S EXPENSES. YOU AREN'T HURTING EITHER. I'M NOT SO MUCH COMPLAINING ABOUT WHAT IT IS NOW AS MUCH AS WHAT ITS GONNA BE IF OBAMA GETS ELECTED. I DON'T THINK ANYONE SHOULD HAVE TO PAY MOST OF THEIR INCOME AWAY TO TAXES GIVE ME A BREAK.