Equal Tax cuts

Discussion in 'Politics' started by Salty, Apr 16, 2014.

  1. Salty

    Salty
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    Exactly what does "Equal Tax Cuts" mean

    This analogy may help


    Let's put tax cuts in terms everyone can understand. Suppose that every day, 10 men go out for lunch and the bill for all 10 comes to $100.
    If they paid their bill the way we pay our taxes, using the progressive tax formula, the billing would go 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, the majority of the men voted democratically to do that.

    The 10 men ate in the diner every day and seemed quite happy
    with the arrangement, until one day the diner owner surprised them.
    "Since you are all good customers," he said,
    "I'm going to reduce the cost of your daily dinner by $20.
    Lunch for 10 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 everyone would get his fair share??
    They realized that $20 divided by six is $3.33.
    But if they subtracted that from everybody's bill,
    then the fifth man and the sixth man would each
    end up being paid to eat. That didn't seem fair.

    So, the owner suggested reducing each man's bill using the US tax formula.
    Then he presented the amounts each should pay.

    The fifth man, like the first four, now paid nothing (100% savings).
    The sixth now paid $2 instead of $3 (savings 33%).
    The seventh now pay $5 instead of $7 (savings 28%).
    The eighth now paid $9 instead of $12 (savings 25%).
    The ninth now paid $14 instead of $18 (savings 22%).
    The tenth now paid $49 instead of $59 (savings only 16%).
    Each of the six was better off than before and the
    first four continued to eat for free. But outside the
    diner, the men compared their savings without
    any sense of thanks.

    "I only got a dollar out of the $20," declared the sixth man.
    He pointed enviously to the tenth man,
    "but richie got $10!" "That's right," exclaimed the fifth man.
    "I only got a dollar back. It's unfair that the richest guy got ten times more than I got!"
    "Yeah!" 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 did not get anything at all. The US system exploits the poor!"
    Then the nine men surrounded the tenth and beat him up.

    The next day the tenth man didn't show up for lunch,
    so the nine ate without him. But when it came
    time to pay the bill, they discovered something important.
    They didn't have enough money from 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 eating in Canada where the atmosphere is friendlier.






    [SIZE=+1]Improved tax system [/SIZE]



    Many had said that the current tax system is too hard to understand. And right they are. The US Tax code is in excess of 16,000 pages
    You can buy a complete 29 voloum from the Govt for only $974!.
    Link to the web page http://www.trygve.com/taxcode.html
    Some have called for the FAIR TAX or FLAT Tax.
    Both of these are unacceptable as there is too
    much papaer work involved.
    The best plan is the Automatic Tax.
    Link to: http://www.electronicflattax.com/
    Under this system ALL electronic (Checks, ATM,
    credit cards, transfers, ect) are automaticly taxed -
    at a very low rate.
    Posslbly even less than 1%. There would be NO
    execptions. All individuals, companies,
    churches, schools, govt, and non-profits
    would pay the tax. But since the rate is
    so low, it would not be a hardship on anyone.
    This plan would replace ALL income, excise, or other current taxes.

     
  2. thisnumbersdisconnected

    thisnumbersdisconnected
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    My guess is, the biggest opponents will be the 377,000 CPAs. That is, after they all wake up three days from now. :laugh:
     
  3. InTheLight

    InTheLight
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    Is this old bad illustration still going around?

    How could they divide the $20 windfall so everyone would get his fair share??
    They realized that $20 divided by six is $3.33. They realized that $20 divided by six is $3.33. But if they subtracted that from everybody's bill,
    then the fifth man and the sixth man would each
    end up being paid to eat. That didn't seem fair.


    Ummm...there is no $20 windfall to "split up". Instead of the restaurant owner giving the diners $20, the cost of the lunch has been reduced, so there is a new lower amount to be proportioned out.

    Here's how it should be analyzed. The bill is no longer $100, the bill is $80. Thus:

    The first four guys paid 0% of the bill before, they will pay 0% of the bill now.
    The fifth guy paid 1% before ($1.00), he pays 1% now, or $.80.
    The sixth guy paid 3% before ($3.00), he pays $2.40 now.
    The seventh guy paid 7% before ($7.00), he pays $5.60 now.
    The eighth guy paid 12% before ($12.00) he pays $9.60 now.
    The ninth guy paid 18% before ($18.00) he pays $14.40 now.
    The tenth guy paid 59% before ($59.00) he pays $47.20 now.

    Simple.

    This is exactly like the old problem with the 3 guests staying in the hotel and they are charged $30 for the room. But then the manager realizes the room should have cost only $25 so he sends the bellhop up to the room to give each person a dollar and to keep two dollars for his trouble. So now each person has paid $9 each, or $27 total, and the bellhop kept $2, so that's $29. What happened to the other dollar?
     
    #3 InTheLight, Apr 16, 2014
    Last edited by a moderator: Apr 16, 2014
  4. InTheLight

    InTheLight
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    Possibly the biggest booster of this system would be the US Post Office and paper mills as everyone goes back to writing checks, transferring securities via mail.

    This "automatic tax" would be onerous for stockbrokers, investors, financial consultants, banks, merchants and store owners, and just about anyone with a 401k or IRA plan. Also, imagine being the recipient of an inheritance and paying 1% on your amount. Or a tax on your payroll direct deposit. Ludicrous.
     
  5. Salty

    Salty
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    Checks would be subject to the AET





     
  6. InTheLight

    InTheLight
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    And who would be tasked with recording each transaction and/or collecting the tax? Suppose I buy a used car from my neighbor and pay with a check? Who collects the tax and reports it?
     
  7. Salty

    Salty
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    - when it is process thur the bank
     
  8. InTheLight

    InTheLight
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    I admit a financial transaction tax is an intriguing idea. The initial implementation would be somewhat shocking, but having no payroll tax is a huge plus. Don't tax labor. Taxing purchases is the core idea behind the consumption tax. A transaction tax gets to a wider base than the consumption tax.
     

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