Senator Government by Marc Demshock

 “Right now everybody’s so pinched that business is bad for everybody and I think when you spread the wealth around, it’s good for everybody.”  Senator Obama’s “Robin Hood” approach of taking from the rich and giving to the poor has been tried before and it is called socialism. And the principles of socialism have always proven to be a dismal failure.

This redistribution of income is all done in the name of fairness. But, is it really fair to punish the successful small business owner who works 15 hrs a day, 7 days a week? The fact of the matter is that some people choose to work harder than others do and they should not be punished for such dedication and work ethic. It is not the role of the government to take from the prosperous and successful and dole handouts out to the poor. We all know that the redistribution of income punishes success and rewards sloth. The role of the government should be to encourage free enterprise and entrepreneurship while eliminating roadblocks to economic prosperity.

One of Barack Obama’s most successful populist claims is that he promises to cut taxes for at least 95% of “working families”—leaving the richest 5% of taxpayers to pick up the tab.  However, that top 5% (those making more than $153,542) already pay 60% of the income tax.  To top it off, 30% of the 95% of “working families” that Obama wants to give tax break to, do not pay any taxes at all.

America’s tax system is already sharply progressive and Obama’s “Robin Hood” policies will make that hill steeper.

Below you will find a simple and interesting explanation of the tax system that will help clarify the “un-fairness” of our current tax system by David R. Kamerschen, Ph.D., Professor of Economics, University of Georgia.  It is of course quite accurate in its distribution of the tax burden and the fact that any tax reduction necessarily falls on those that pay the largest share of taxes.

BARSTOOL ECONOMICS

“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 got’ ‘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, ladies and gentlemen, 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 may not show up anymore. In fact, they might start drinking overseas where the atmosphere is somewhat friendlier.”

For those who understand, no explanation is needed.
For those who do not understand, no explanation is possible.

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One Response

  1. You’re missing one important point about the US tax system – there’s no escape! If rich people went overseas to live, they’d still have to pay US taxes, and the Foreign Earnings exemption would not reduce their taxes by that much because their earnings are so high. In order to not pay US taxes they would have to give up US citizenship, but they would still have to pay US taxes for ten years after giving up their Nationality. And they’d find it very difficult to visit the US too… so the rich man couldn’t leave the drinking party.

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