BS: Tax the rich? (Sorry if already posted)

Subject: BS: Tax the rich? (Sorry if already posted)
From: gnu
Date: 17 Oct 08 - 06:25 PM

Our Tax System Explained: Bar Stool 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.

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.

Subject: RE: BS: Tax the rich? (Sorry if already posted)
From: CarolC
Date: 17 Oct 08 - 06:33 PM

Seems like the better way to do it would have been to scrap the original formula and work out a new one using the same method they used to come up with the first one. I think Dr. Kamerschen's expertise is more in smoke and mirrors than it is in economics.

Subject: RE: BS: Tax the rich? (Sorry if already posted)
From: CarolC
Date: 17 Oct 08 - 06:35 PM

I should have also said that this model he uses is not an accurate reflection of how the tax system we have works. It's way to oversimplified.

Subject: RE: BS: Tax the rich? (Sorry if already posted)
From: Bill D
Date: 17 Oct 08 - 06:50 PM

Lots of hypotheticals in that system he describes.

I don't think anyone is suggesting the rich should not have benefits from being clever enough to BE rich....paying more taxes can still leave them better off by far than most of us.

The problem is, they usually want NO restrictions on how much they can keep or how they get it. This, as we have seen, leads to abuse of the system.

I think a guy who makes $3 million profit can learn to live ok on $2.3 million

Subject: RE: BS: Tax the rich? (Sorry if already posted)
From: CarolC
Date: 17 Oct 08 - 06:57 PM

The other problems with that hypothetical is that the rich also get a lot more benefits from the taxes they pay than do those who are not rich. The beer scenario doesn't take any of the real world variables into consideration. Rich people receive more services from the government than those who are not rich. Rich people are more likely to have tax loopholes at their disposal, meaning that they actually pay a lot less taxes than the basic tax formula would seem to indicate. Rich people are far more likely to benefit from large subsidies to corporations (corporate welfare) than people who are not rich.

There's lots of rich people who have figured out how to pay no taxes at all.

Subject: RE: BS: Tax the rich? (Sorry if already posted)
From: McGrath of Harlow
Date: 17 Oct 08 - 08:42 PM

"being clever enough to BE rich."

For example, as kat pointed out "There's lots of rich people who have figured out how to pay no taxes at all."

That's clever I suppose.

Subject: RE: BS: Tax the rich? (Sorry if already posted)
From: Rapparee
Date: 17 Oct 08 - 10:15 PM

Tax the rich? Danged right!

...The growing disposition to tax more and more heavily large estates left at death is a cheering indication of the growth of a salutary change in public opinion. The State of Pennsylvania now takes -- subject to some exceptions -- one-tenth of the property left by its citizens. The budget presented in the British Parliament the other day proposes to increase the death-duties; and, most significant of all, the new tax is to be a graduated one. Of all forms of taxation, this seems the wisest. Men who continue hoarding great sums all their lives, the proper use of which for the public ends would work good to the community, should be made to feel that the community, in the form of the state, cannot thus be deprived of its proper share. By taxing estates heavily at death the state marks its condemnation of the selfish millionaire's unworthy life.

It is desirable that nations should go much further in this direction. Indeed, it is difficult to set bounds to the share of a rich man's estate which should go at his death to the public through the agency of the state, and by all means such taxes should be graduated, beginning at nothing upon moderate sums to dependents, and increasing rapidly as the amounts swell, until of the millionaire's hoard, as of Shylock's, at least

    " ---- The other half
    Comes to the privy coffer of the state."

This policy would work powerfully to induce the rich man to attend to the administration of wealth during his life, which is the end that society should always have in view, as being that by far most fruitful for the people. Nor need it be feared that this policy would sap the root of enterprise and render men less anxious to accumulate, for to the class whose ambition it is to leave great fortunes and be talked about after their death, it will attract even more attention, and, indeed, be a somewhat nobler ambition to have enormous sums paid over to the state from their fortunes....

                           --Andrew Carnegie, "Wealth"
                           (North American Review, June, 1889)

If you feel so inclined you can read the whole thing here.

Subject: RE: BS: Tax the rich? (Sorry if already posted)
From: Bill D
Date: 17 Oct 08 - 10:28 PM

remember the old joke about Robin Hood?

"Excuse me, Mr. Hood, sir...but why is it you take from the rich and give to the poor?"


"Well, mostly bacause the poor have no money, while the rich do."

Subject: RE: BS: Tax the rich? (Sorry if already posted)
From: Barry Finn
Date: 18 Oct 08 - 12:54 AM

Nice try Gnu but not quite right.

It has always been that the 1st four who were said to have drunk all night for nothing actually cashed their checkes at the bar before hand & were really drinking on credit, their bar bill was big enough to cover the last 5 who in reality had pockets full of cash but said nothing & they were the ones drinking for free, the 5th guy was the one to leave the barman a tip & he was decent about it but the amount of the tip was only 20% of the 1st four's total. So the 1st 5 paid for themselves & it's the wealthier last 5, who again drank all night for nothing & the only thing they left behind was a good story for the bartender who owned the watering hole. So when the bar decieded that they'd no longer cash the checks of the poorest nor give them credit, the richest last 4 made a deal & told the 1st four that if they'd sign over their checks to them that they could continue drink at the bar for free. So it was agreed to & the 1st four signed over their hard earned checks & drank the night away the last 4 also drank the night away, for free as they had been before but now the bartender was a bit upset because he was cut out of the deal, so he told the middle guy he had to cover the amount the the bartender used to get which was as much as the total of the checks of the 1st four. Then the bartender deceided that he'd up the price of the drinks & started charging the poorer 2 of the last 4 richest. Now we have a fair view of how our tax system is really run. The top 2 drink for free as always & the other 8 pay the bill & have all eventually come into poorer class with no one in the middle any more.
Unknown to the all but the two richest, the bartender & those 2 richest were in league with each other all along.

Their are so many corporations that pay no taxes & manuy more hat pay very little while reaping the harvest that's from the labor's of the lower classes. It's the lower class that's been shouldering the burden for the wealthy so why should "we" keep supporting "them", it's high time that someone has called the tax system on it's unleveled levie.

If anyone thinks that the rich & mighty have been paying their fair share of the tax burden I've got a bridge to sell you. It has always been they make the money & then they tax US, the one's who labored so that they could profit. Obama is the 1st of any high ranking official that I can think of who has ever made any move to reverse this tax phenomenon.
"Little bee sucks the blossom, big bee gets the honey
Little man raises cotton, big man gets the money".

We get back $600 from Bush & the wealthy get back the lion's share. So we pay into the system far more & make far less & when a tax break rolls around we see a drop in the bucket while they get to keep the rest along with the buckets & the trucks that the buckest rolled in on, whoops, & did I mention that we had to pay the gas & other transportation costs of getting the buckets in the trucks to their final destination points.

Barry

Subject: RE: BS: Tax the rich? (Sorry if already posted)
From: gnu
Date: 18 Oct 08 - 05:32 AM

gnu? Gnu, even?

I did not write that... read the entire post. Any logic which attempts to hold forth that I have either endorsed or denied anything within the post is clearly flawed. Perhaps an elementary and empirical study in philosophy is in order, rather than in economics.

Subject: RE: BS: Tax the rich? (Sorry if already posted)
From: GUEST,Shimrod
Date: 18 Oct 08 - 05:59 AM

So, 'gnu' are you saying that in the US poor people don't pay taxes?

I live in the UK and, since losing my job, I'm now relatively poor - but I still pay tax (quite a lot of tax in proportion to my income, as it happens). And that's just income tax - I also have to pay purchase tax (VAT)on many things that I buy and I have to tax my car etc., etc.

Now I happen to think that it's the responsibility of every citizen to pay his taxes - but when I read about bankers who've f*cked up the world economy through incompetence and greed, and put us all in peril, and are still expecting massive bonuses, and are probably still working on ways to avoid paying taxes on those (surely) 'unearned' riches, it seems to me that some citizens are more responsible than others.

Subject: RE: BS: Tax the rich? (Sorry if already posted)
From: gnu
Date: 18 Oct 08 - 06:05 AM

I didn't say squat. See...

Subject: RE: BS: Tax the rich? (Sorry if already posted)
From: gnu - PM
Date: 18 Oct 08 - 05:32 AM

Subject: RE: BS: Tax the rich? (Sorry if already posted)
From: maeve
Date: 18 Oct 08 - 06:13 AM

As gnu said, the Bar Stool Economics piece was from the pen of:

"David R. Kamerschen, Ph.D.
Professor of Economics
University of Georgia"

Subject: RE: BS: Tax the rich? (Sorry if already posted)
From: Rapparee
Date: 18 Oct 08 - 08:05 AM

Don't go gnu-bashing. He's clearly not capable of thinking that thing up and besides he's a lifelong member of the Canadian Free Beer Party.

Subject: RE: BS: Tax the rich? (Sorry if already posted)
From: gnu
Date: 18 Oct 08 - 08:27 AM

There's a party? Where?

Subject: RE: BS: Tax the rich? (Sorry if already posted)
From: Bobert
Date: 18 Oct 08 - 08:31 AM

Ya know, I don't trust all profesors... My first day in Statistics in college, the professor came out and using the chalk board proved that 1 = 2??? There were no apparent flaws in his meathodology..,. Maybe some of you folks have seen this also??? Yeah, I'm sure that there is some smoke and mirrors involved but it certainly left an impression on me...

As for taxes??? Of course, the rich will always say they pay too much... That is human nature... But if 5% control 82% of the wealth then and they are taxed as if they control only 55% then someone has to make up the 27% differential...

That is the real point...

B~

Subject: RE: BS: Tax the rich? (Sorry if already posted)
From: Little Hawk
Date: 18 Oct 08 - 08:32 AM

The biggest lie commonly employed in this tax question is the lie of omission, and it works this way:

The only tax that gets discussed is income tax...as if that was the only tax there was in life!

Well, it sure as hell isn't. There is tax on bloody well everything except blowing your nose, not just on incomes. You pay sales tax on the stuff you buy and the services you purchase. You pay property tax if you own property. You pay a host of hidden and unnoticed taxes that are built into everthing you ever pay for.

So, guess what? EVERYBODY pays taxes! The guy who is too poor to qualify for paying income tax STILL pays taxes on everything else he buys, and most of those taxes go unseen, built into the price he has to pay. He isn't even aware of most of them.

This is the part that the Right Wing blissfully ignores when they go ballistic over people who "don't pay taxes" getting a tax rebate.

Ha! There is no one out there who doesn't pay taxes. It's inescapable. I bet if all the actual taxes were revealed that we would discover that most of us pay about 40 cents on every dollar we make in taxes every year (and only about half of it is income tax).

People notice the income tax because it's one lump sum. That hurts, and they remember it. They don't notice the bloodletting when it's in little drops getting sucked out on 365 different days a year, meaning every time they pull their wallet out of their pocket.

Subject: RE: BS: Tax the rich? (Sorry if already posted)
From: Folkiedave
Date: 18 Oct 08 - 08:51 AM

For example, as kat pointed out "There's lots of rich people who have figured out how to pay no taxes at all."

That's clever I suppose.

That makes the assumption that the rich are clever. They aren't - they employ clever accountants.

The converse of the argument of not taxing the rich is that you tax the poor.

An interesting argument but that is precisely what happens.

Subject: RE: BS: Tax the rich? (Sorry if already posted)
From: Bobert
Date: 18 Oct 08 - 08:56 AM

Yo, LH,

Lucky you... We have a nose blowing tax down here...

The only thing that isn't taxed yet is gas passin'... But you can bet that someone is workin' on it...

Subject: RE: BS: Tax the rich? (Sorry if already posted)
From: Little Hawk
Date: 18 Oct 08 - 08:57 AM

Oh, and by the way, a constantly inflating currency that steadily loses its value is also a tax on the general public. That is another part of the 40% of your income a year that disappears down the gullet of the invisible tax monster.

Everybody pays taxes. Nobody gets free beer.

Subject: RE: BS: Tax the rich? (Sorry if already posted)
From: Sandy Mc Lean
Date: 18 Oct 08 - 09:03 AM

Perhaps a benchmark on income should be established. I do not live in the USA but I will use it as an example:
The President of your nation holds the highest office of in the land and is paid a wage that should reflect his office. Set the benchmark at 99% of his income. Anyone exceeding that amount would be taxed at 100% on the excess. Sports and movie stars would then earn closer to what they are worth and with the extra income the government could make both health care and beer free for everyone.

Subject: RE: BS: Tax the rich? (Sorry if already posted)
From: gnu
Date: 18 Oct 08 - 12:14 PM

I am all for free beer, but an athelete should make every penny s/he can get. Except baseball plyers, and maybe golf, too, on accounta they are pussies.

Subject: RE: BS: Tax the rich? (Sorry if already posted)
From: Sandy Mc Lean
Date: 18 Oct 08 - 01:53 PM

Of course business executives would also have to pay tax and their tax lawyers as well. There may even be enough then to import Keiths or Moosehead for the good citizens.

Subject: RE: BS: Tax the rich? (Sorry if already posted)
From: gnu
Date: 18 Oct 08 - 02:37 PM

The moose os loose!

Well, makes me loose.

Subject: RE: BS: Tax the rich? (Sorry if already posted)
From: Sandy Mc Lean
Date: 18 Oct 08 - 02:41 PM

gnu, I'll not ask loose in what way?

Subject: RE: BS: Tax the rich? (Sorry if already posted)
From: gnu
Date: 18 Oct 08 - 02:43 PM

rrrrRRRRRgggghhhhhhhh

I can call with the best!

Subject: RE: BS: Tax the rich? (Sorry if already posted)
From: Stringsinger
Date: 19 Oct 08 - 01:10 PM

Taxing the rich and using a barroom for a metaphor is like using a whore house to describe morality.

The deal is this, the wealthy are still richer despite the taxes they have to pay. Money talks and bullshit walks.

Subject: RE: BS: Tax the rich? (Sorry if already posted)
From: gnu
Date: 19 Oct 08 - 01:53 PM

Yeah... it's like when people here in Canuckistan whine about the taxes they pay... wish I had to pay more than I do.

Subject: RE: BS: Tax the rich? (Sorry if already posted)
From: Jim Dixon
Date: 19 Oct 08 - 07:09 PM

David R. Kamerschen says he did NOT write the essay, and doesn't know who did.

Snopes.com has some more information.

Subject: RE: BS: Tax the rich? (Sorry if already posted)
From: dick greenhaus
Date: 19 Oct 08 - 08:04 PM

Total income isn't the question--it's a matter of disposable income. If a poor man earns $20,000 and spends $18,000 of it on food, shelter and medical expenses, his disposable income is $2000. If a rich plumber makes $250,000, he might spend $100,000 of it on necessities, but he still has a disposable income of $150,000. He can pay taxes at a rate several times higher than the poor man, and still come out way ahead.

That's the whole idea behind graduated income taxes.

Subject: RE: BS: Tax the rich? (Sorry if already posted)
From: Rapparee
Date: 19 Oct 08 - 09:02 PM

I'd druther trust a moral (actually ethical) whore than a whole LOT of politicians, accountants, investment bankers....

Subject: RE: BS: Tax the rich? (Sorry if already posted)
From: Bee-dubya-ell
Date: 20 Oct 08 - 12:05 AM

If you raise taxes on the rich, they'll just raise the prices of whatever goods or services they provide to the unrich. Increased taxes are just like any other increased business expense. Ultimately, the extra cost is just going to be passed on the consumer.

Subject: RE: BS: Tax the rich? (Sorry if already posted)
From: Peace
Date: 20 Oct 08 - 12:25 AM

Stop consuming.

Subject: RE: BS: Tax the rich? (Sorry if already posted)
From: Peace
Date: 20 Oct 08 - 12:27 AM

I saw the title of this thread and thought, "What a novel idea."

Subject: RE: BS: Tax the rich? (Sorry if already posted)
From: Donuel
Date: 20 Oct 08 - 12:43 PM

Taxing the rich is said (by the rich) to be unamerican and unpatriot.

Redistribute the wealth? Thats something communists and Robin Hood would do.

We need to keep throwing trillions of dollars at Wall Street CEO's and their corporations.

If we did anything different we would end up with an ethnic & unwashed public getting health care and advanced education.


{{{{{{{{{ see how Republican media & think tank messages sound ludacris when they are not spun effectively ? }}}}}}}}}}}

Subject: RE: BS: Tax the rich? (Sorry if already posted)
From: Wesley S
Date: 20 Oct 08 - 01:01 PM

It almost seems like when folks get rich - they get greedy and turn into misers. What's so wrong about paying taxes?

Subject: RE: BS: Tax the rich? (Sorry if already posted)
From: dick greenhaus
Date: 20 Oct 08 - 02:21 PM

Not taxing the rich at a higher rate than the poor implies that somehow it's just for a poor person to pay a higher percentage of his or her disposable income than a rich person does.

Subject: RE: BS: Tax the rich? (Sorry if already posted)
From: gnu
Date: 20 Oct 08 - 02:27 PM

Ahhhh... I knew this thread would get somewhere! >;-)

Subject: RE: BS: Tax the rich? (Sorry if already posted)
From: PoppaGator
Date: 20 Oct 08 - 02:54 PM

What we're talking about in the US these days is the extention and increase of tax breaks for multinational corporations and for the wealthiest individuals. That's not the same as imposing new taxes. And, for every dollar no longer being paid by Exxon-Mobil and Bill Gates, someone else who is less able to afford it has to pony up a buck.

We currently have the greatest concentration of wealth in the hands of a relative few since the Great Depression. "Redistribution of wealth" has already happened! Putting things back to right is what we need, and should not be characterized as "un-American." And those creeps who love to sneer the phrase "class warfare" are the very ones who have already launched an economic-class-based sneak attack and have been winning big gains for years.

Granting the overprivileged 2% ever-more favorable treatment is no good for anyone. When the vast majority of the population is too broke to buy stuff, the economy grinds to a halt.

Last Friday's Bill Maher show (currently repeating on HBO) included a very telling quote from one of FDR's associates in the slow-but-eventually-successful recovery from the 1929 financial fiasco. I don't have the guy's name or the exact wording, but it went something like this:

"Our economy had become like a poker game where a very few players had grabbed up almost all the chips. Everyone else had to borrow to stay in the game, and when their credit ran out, the game was over."

Subject: RE: BS: Tax the rich? (Sorry if already posted)
From: GUEST,Guest from Sanity
Date: 21 Oct 08 - 03:27 AM

Is 'taxing the rich' a form of discrimination?

Subject: RE: BS: Tax the rich? (Sorry if already posted)
From: CarolC
Date: 21 Oct 08 - 03:55 AM

Why not tax the rich? The rest of us have to pay taxes.

Subject: RE: BS: Tax the rich? (Sorry if already posted)
From: GUEST,Guest from Sanity
Date: 21 Oct 08 - 04:57 AM

Well, they are taxed....maybe change the loop holes...(?)

Subject: RE: BS: Tax the rich? (Sorry if already posted)
From: GUEST,TruthBeTold
Date: 31 Oct 08 - 01:42 PM

Professor David Kamerschen has adamantly denied writing this ridiculous story.

If you want information on how tax cuts work try this:
http://economix.blogs.nytimes.com/2008/10/10/tax-cut-follies/?ei=5070&emc=eta1

Subject: RE: BS: Tax the rich? (Sorry if already posted)
From: dick greenhaus
Date: 31 Oct 08 - 02:47 PM

Graduated income taxes were introduced by that sneaky commie Theodore Roosevelt.

Subject: RE: BS: Tax the rich? (Sorry if already posted)
From: kendall
Date: 31 Oct 08 - 07:44 PM

Quit picking on the rich. Think of all the money they have to spend to buy lobbyists who write the laws that allow them to avoid taxes. They don't get a free ride.