Wednesday, May 17, 2006
Tax Analogy
Unknown author
Suppose that every day, ten men go out for dinner and the total 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 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 are all such good customers," he said, "I'm going to reduce the cost of your daily meal by $20." Dinner 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 eat 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 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. It looked like this:
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 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 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 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!
That 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 eat somewhere else and not show up anymore.
Suppose that every day, ten men go out for dinner and the total 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 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 are all such good customers," he said, "I'm going to reduce the cost of your daily meal by $20." Dinner 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 eat 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 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. It looked like this:
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 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 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 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!
That 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 eat somewhere else and not show up anymore.
Monday, May 01, 2006
Letter to Neal Boortz
Neal Boortz is sponsoring a FairTax Rally on May 24th at 7:30 PM. It will be at the Gwinnett Convention Center in the northern suburbs of Atlanta. Come and meet Neal, Congressman Linder, Sean Hannity, Herman Cain and several thousand of our FairTax friends.
Boortz
Map to the Gwinnett Convention Center
Visitor information
If you can't make it to Atlanta, hand-write a letter to Neal. (Emails won't do.) Let him know you support FairTax. He plans an on-stage display of all the letters. After the rally, the letters will be sorted and delivered to politicians in Washington.
FairTax
The Neal Boortz Show
1601 W. Peachtree St. NE
Atlanta, Georgia 30309
Here's my letter:
Dear Mr. Boortz:
I'm a Conservative Republican like those at the National Federation of Republican Assemblies (www.gopwing.com) and I'm not pleased with many of the actions of our elected Republicans. I want true border control, where we know who leaves and who enters the country, and we address the problems with illegal aliens already in the country. I want true fiscal conservatism. I don't want office holders at the federal level to spend a penny more on programs not called for in the U.S. Constitution. Fiscally, there has been one party, the Rebulocrats - spending tax dollars like drunken Kennedys.
And finally, I want true tax reform. The "experts" on the President's Panel on Tax Reform have revealed themselves as beltway loyalists with too many ties to K Street. I'm calling on my elected officials to be leaders in this area, not sheep. I believe the best solution to our tax code debacle is a National Sales Tax as proposed in the FairTax (H.R. 25/S. 25). I have already written to Senators Hutchison and Cornyn, and to the Republican Party of Texas. I will give my time and money this year only to leaders who co-sponsor the FairTax. I’m proud that Sen. Cornyn has answered the call and has become a co-sponsor.
I hope to be a part of the Republican Victory Team, because I hope more Republicans and Democrats alike take the values we hold as their own. Nationally, the Republican Party has slipped left along with the Democrats. The Democrats started farther left than we, so their shift is more easily seen. I want the Republican Party to move back to what is Right. Adopting the FairTax will do much to move the country correctly.
Sincerely,
Steve Harris
Map to the Gwinnett Convention Center
Visitor information
If you can't make it to Atlanta, hand-write a letter to Neal. (Emails won't do.) Let him know you support FairTax. He plans an on-stage display of all the letters. After the rally, the letters will be sorted and delivered to politicians in Washington.
FairTax
The Neal Boortz Show
1601 W. Peachtree St. NE
Atlanta, Georgia 30309
Here's my letter:
Dear Mr. Boortz:
I'm a Conservative Republican like those at the National Federation of Republican Assemblies (www.gopwing.com) and I'm not pleased with many of the actions of our elected Republicans. I want true border control, where we know who leaves and who enters the country, and we address the problems with illegal aliens already in the country. I want true fiscal conservatism. I don't want office holders at the federal level to spend a penny more on programs not called for in the U.S. Constitution. Fiscally, there has been one party, the Rebulocrats - spending tax dollars like drunken Kennedys.
And finally, I want true tax reform. The "experts" on the President's Panel on Tax Reform have revealed themselves as beltway loyalists with too many ties to K Street. I'm calling on my elected officials to be leaders in this area, not sheep. I believe the best solution to our tax code debacle is a National Sales Tax as proposed in the FairTax (H.R. 25/S. 25). I have already written to Senators Hutchison and Cornyn, and to the Republican Party of Texas. I will give my time and money this year only to leaders who co-sponsor the FairTax. I’m proud that Sen. Cornyn has answered the call and has become a co-sponsor.
I hope to be a part of the Republican Victory Team, because I hope more Republicans and Democrats alike take the values we hold as their own. Nationally, the Republican Party has slipped left along with the Democrats. The Democrats started farther left than we, so their shift is more easily seen. I want the Republican Party to move back to what is Right. Adopting the FairTax will do much to move the country correctly.
Sincerely,
Steve Harris
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