The Down Range Forum
Member Section => Down Range Cafe => Topic started by: philw on May 18, 2009, 07:55:32 AM
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Tax System… Explained In Beer!
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!
And that, boys and girls, journalists and college professors, this 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.
David R. Kamerschen, Ph.D.
Professor of Economics
University of Georgia
For those who understand, no explanation is needed.
For those who do not understand, no explanation is possible
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According to what I have read, in modern taxation systems, taxes are levied in money, but in-kind and corvée taxation are characteristic of traditional or pre-capitalist states and their functional equivalents. The method of taxation and the government expenditure of taxes raised is often highly debated in politics and economics. Tax collection is performed by a government agency such as Canada Revenue Agency, the Internal Revenue Service (IRS) in the United States, or Her Majesty's Revenue and Customs (HMRC) in the UK. When taxes are not fully paid, civil penalties (such as fines or forfeiture) or criminal penalties (such as incarceration) may be imposed on the non-paying entity or individual.
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filing back taxes (http://www.taxmatterssolutions.com/articles/filing-paying-back-taxes.php)
Welcome aboard Lady Lou. Let me say I am glad to see more female members. Please ignore Tom, he just can't help himself most of the time and hope M'Lette is happy enough with more female solidarity that she will restore cable to our corner where we are sent for being "bad". ;D Seriously, there are good folks here and welcome.
FQ13
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I have clients that are worth 10s of millions, and have not paid a dime in taxs in 20 years. ( and they report every thing... get a call from one about 3 weeks left in the quarter, "I need to spend 20k this week, what can you do to this property?" )
I also have clients that make well north of 1 mil a year, but only pay about 100k in taxs a year. Its the % of your income taxed that matters. not the total ammount.
to put it in prespective of beer...
you buy a 6 pack and have to pay one beer.
the guy behind you bought a 24 pack, and had to pay 3 beers.
yeah he paid 3x what you did, but you payed 1/6th of your income, he only paid 1/8th. who paid more? who got the better "dea;"
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I have clients that are worth 10s of millions, and have not paid a dime in taxs in 20 years. ( and they report every thing... get a call from one about 3 weeks left in the quarter, "I need to spend 20k this week, what can you do to this property?" )
I also have clients that make well north of 1 mil a year, but only pay about 100k in taxs a year. Its the % of your income taxed that matters. not the total ammount.
Would you rather they pay the government 20k or you 20k? ;D I don't pretend to know about taxes, although I'm certainly willing to criticize or current system, but ain't there an easier, 'fairer' way to do this? I'm one of those folks that don't pay a lot in taxes, but I certainly don't feel like I'm entitled to that free beer like those drunks.
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Would you rather they pay the government 20k or you 20k? ;D I don't pretend to know about taxes, although I'm certainly willing to criticize or current system, but ain't there an easier, 'fairer' way to do this? I'm one of those folks that don't pay a lot in taxes, but I certainly don't feel like I'm entitled to that free beer like those drunks.
www.fairtax.org
It used to be a respected tradition to beat, hang, or shoot the tax man.
Being Jailed for refusing to pay his poll tax was what sent Thoreau off to Walden.
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I have clients that are worth 10s of millions, and have not paid a dime in taxs in 20 years. ( and they report every thing... get a call from one about 3 weeks left in the quarter, "I need to spend 20k this week, what can you do to this property?" )
I also have clients that make well north of 1 mil a year, but only pay about 100k in taxs a year. Its the % of your income taxed that matters. not the total ammount.
to put it in prespective of beer...
you buy a 6 pack and have to pay one beer.
the guy behind you bought a 24 pack, and had to pay 3 beers.
yeah he paid 3x what you did, but you payed 1/6th of your income, he only paid 1/8th. who paid more? who got the better "dea;"
You need to differentiate between worth and earn. For the most part we get taxed on earnings (outside of property tax on certain items, and license fees). A person buys things with taxed earned income, so it is unfair to expect someone to pay on something they own.
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You need to differentiate between worth and earn.
+1.
There are many tax differed investments out there. You don't need to be "rich" to qualify. These type of investments spread the tax liability out over a longer period of time, much like an IRA. It doesn't mean these people "don't pay any taxes". It means they will be paying them at a later date, hopefully when they aren't earning as much, and fit into a lower tax bracket. These type of investments are open to anyone. Bill T.
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You need to differentiate between worth and earn. For the most part we get taxed on earnings (outside of property tax on certain items, and license fees). A person buys things with taxed earned income, so it is unfair to expect someone to pay on something they own.
the 2 clients I was speaking of, one makes about 600k a quater, the other makes about 500k a year. I pay more the both combined, do to the fact they have several biz running. some strikly to lose money.
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the 2 clients I was speaking of, one makes about 600k a quater, the other makes about 500k a year. I pay more the both combined, do to the fact they have several biz running. some strikly to lose money.
And the ones that lose money ease the tax burdens of the ones that don't. Of course, businesses don't pay taxes anyway, people do.
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Tax my beer or give me death.
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Tax my beer or give me death.
yea about that..... ahh got to love Australia
we get taxed on it over here and they are wanting to put it up they are focusing on the alcopops ( the pre-mixed drinks that the kids love ) to "STOP" the bing drinking never mind the $365 million they made in a few months ::)
KRudd keeps on telling it is to stop the teen bing drinkers
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yea about that..... ahh got to love Australia
we get taxed on it over here and they are wanting to put it up they are focusing on the alcopops ( the pre-mixed drinks that the kids love ) to "STOP" the bing drinking never mind the $365 million they made in a few months ::)
KRudd keeps on telling it is to stop the teen bing drinkers
Our socialists try to use the same "it's for the children" BS over here.