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 ball. “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 men would 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 a higher percentage the poorer he was, to follow the principle of the tax system they had been using, and he proceeded to work out the amounts he suggested that each should now pay.
And so the fifth man, like the first four, now paid nothing (100% saving).
The sixth now paid $2 instead of $3 (33% saving).
The seventh now paid $5 instead of $7 (28% saving).
The eighth now paid $9 instead of $12 (25% saving).
The ninth now paid $14 instead of $18 (22% saving).
The tenth now paid $49 instead of $59 (16% saving).
Each of the six was better off than before. And the first four continued to drink for free. But, once outside the bar, the men began to compare their savings.
“I only got a dollar out of the $20 saving,” 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 benefit than me!”
“That’s true!” shouted the seventh man. “Why should he get $10 back, when I got only $2? The wealthy get all the breaks!”
“Wait a minute,” yelled the first four men in unison, “we didn’t get anything at all. This new tax 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 their 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 government ministers, is how our tax system works. The people who already pay the highest taxes will naturally 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. It's not so much people mind helping out, but when you have a government that spends $1 Trillion more than it takes in, it is not a revenue problem, it is a spending problem. Get that in check and I am with you.
But in that analogy - it's the 10th man that keeps promising to pay the bartender - but never does. He keeps benefiting from the beer he drinks, but the comes to pay up the 10th man is full of excuses ... "the Swiss have my money," "I have stockholders to answer to," "the big spill wasn't really my fault, but I'll give you a $20 for it and we can call it good", "I really don't think it's fair that I should be limited to three yachts this year because last year I could buy four," "I'm G.E. and have lost so much money - I shouldn't have to pay my bar bill."
According to your analogy every time the bartender comes with the bill - the 10th man dashes out the door because he feels like he's paid his fair share ... even though his dad, his grand dad and great grand dad all paid the bartender promptly each and every time. It's a legacy every generation has embraced to make the tavern a better place for the next generation.
Problem is - the tavern has been subject to the promises of a lot of people who are in the same class like the 10th man. Each time the bartender threatens to raise the price of their drinks - they keep threatening to leave and go to the Swiss bar or the Cayman Island bar. So the bartender keeps accruing debt so that at least he has some people coming in. Because he knows the 10th man has money - he offers incentives (even though he can't afford them) "free meals," "half-priced shots," "free ride on the buckin' bronco" ... but like where we are today - eventually no one will lend the bartender any more money because he's tapped out. Finished. Dried up.
All of the 10th men out there - have ALREADY taken their money, their capital and their jobs out of the country. We've been hemorrhaging for decades now ... because the 99% of us believed that if you give the 10th men their tax breaks, incentives, tax subsidies - the jobs will come.
They haven't.
I'm not sure if you're aware of this, but the 35% tax rate on the rich is the LOWEST rate since we were in high school. When we were born - 1969/70's ... the tax rate was 70%. When there isn't enough revenue - we borrow - and that's why we have the deficit that SOARED in the 80's and where we are today. It's the rate Republicans are fighting for today.
Ever since Reagan did his little trickle-down economic trick ... tax revenue dropped, the country had to borrow and the deficit soared. Companies did invest in American jobs because tariffs and other trade embargoes were in place to ensure that the jobs stayed home. When the Great Big Outsourcing began - the jobs left - and companies were STILL rewarded with lower tax rates.
If history teaches us anything - we should be investing at home first. We already have a man running for the Presidency that has embraced the ideal of taking your money elsewhere ... and I hate to disagree with you but that sends the wrong message to the country.
The fact we can have this discussion, the fact you can choose your career, own a car, own a home, freely leave the country on vacation, move, buy 10 flat screen TV's along with the sledgehammer to smash them up, send your children to wherever you want ... all makes it about freedom ... not socialism.
But I do agree with you on something though. A beer summit would do wonders to resolve this ... the more trashed everyone is - the less painful it feels like some days.
Cheers!
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