Thursday, September 27, 2007

What is fair in death and taxes?

Gaul coin showing man-headed horse on the reverse.
A grim- reaper like figure hovers above, replacing the usual rider.
Notice the solar wheel behind.

I received one of them emails that have a little story. The logic written there pumped some organic hydraulic fluid to a part of my brain that made me want to share my thoughts on it. Now that my bloggin oblongata is all full of life, here ya go.

This is the email text:

Since we are all concerned about taxes and about a National Sales Tax
we need to understand our current system and how it works.

Let's put tax cuts in terms everyone can understand.

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, 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

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.

I looked up the author of this and he denies writing it. says this about it:

I thought the end of it smelled of some sort of propaganda, "boys and girls". I have no idea what sort of propaganda, perhaps be happy and don't let taxes get you down. Or maybe stop your bleating stupid sheeple. That last line insinuates if you have to ask then you would not understand. I have never cared much for that sort of condescension.

My take on taxes falls somewhere close to the In simplicity the more you have money to consume the more taxes you can afford to pay, allowing no one a way to avoid taxation, no matter how well his tax lawyer performs.

Why does Jed believe the more you have the more you are obligated to pay your fellow humans? Because the burden on a man who makes 20k a year paying 1k in taxes has significant lifestyle adjustments over his five percent payment. Whereas a man making 200k a year paying 20k has less lifestyle changes to compensate over for his ten percent payment. If it were not for the dozens of 20k men working for him he would not have that lifestyle at all. Furthermore the man making 200 million a year paying 50 million in taxes still has plenty to do whatever his heart chooses after a twenty five percent tax. He has hundreds of 20k men and dozens of 200k men, he does owe them something for their efforts and his mega success...just sayin'.

I know I did not address death as the title suggest, but why make matters worse?
:: posted by Tennessee Jed, 10:23 PM


A friend and fellow tea partier from Western NY sent me this. I sent it to you because I know your passion for tax w/o rep. Ya see, in NY the scenario played out in our little rigmarole here actually happens. The rich guys have all left the county and moved to some small scrappy little city to live out the remainder their deferred. The entire tax burden is now laid on the land owner, i.e. the new rich guy. Eventually I became the rich guy on the block, never actually reaching the 30k gross mark. I left too. I'm happy now. East Tennesseans really do have a grip on this whole tax thing. I'm a bit perplexed still, I wonder...Jed, I know I'm out of the fire, but am I in the frying pan or safely on the cooling rack?
Blogger Basegasket, at 8:39 PM  

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