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Tag: taxes

Why Punitive Taxes On Those Who Generate Wealth And Employment Make Us All Poorer

This has been around for a while, but it is worth re-reading:

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 realised 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.

Anonymous, sometimes erroneously attributed to Dr David R Kamerschen.

Palin: How We Got Here and What We Can Do About It

First, hello!

It has been a month since my last post – my apologies.

I have had some minor health and family issues to sort out. Then there is the retail downturn, and downturn in the number of travellers to the island. I have had to work longer hours, taking on tasks I would not normally accept so the bills can be paid. All that has meant a lack of mental and emotional energy for blogging.

But enough with the excuses!

First up, Sarah. It still amazes me that some people keep buying the liberal media theory that she is a stupid small town mayor who has inflated ideas of her own abilities.

She has vastly more business and administrative experience than Obama.

Her latest Facebook post is the best thing I have read so far on the US credit rating downgrade, the reasons for it and what can be done to restore confidence.

Some excerpts:

I’m surprised that so many people seem surprised by S&P’s decision. Weren’t people paying attention over the last year or so when we were getting warning after warning from various credit rating agencies that this was coming? I’ve been writing and speaking about it myself for quite some time.

Back in December 2010, I wrote: “If the European debt crisis teaches us anything, it’s that tomorrow always comes. Sooner or later, the markets will expect us to settle the bill for the enormous Obama-Pelosi-Reid spending binge. We’ve already been warned by the credit ratings agency Moody’s that unless we get serious about reducing our deficit, we may face a downgrade of our credit rating.” And again in January, in response to President Obama’s State of the Union address I wrote: “With credit ratings agency Moody’s warning us that the federal government must reverse the rapid growth of national debt or face losing our triple-A rating, keep in mind that a nation doesn’t look so ‘great’ when its credit rating is in tatters.”

Many commonsense Americans like myself saw this day coming. In fact, in June 2010, Rick Santelli articulated the view of independent Tea Party patriots everywhere when he shouted on CNBC, “I want the government to stop spending! Stop spending! Stop spending! Stop spending! STOP SPENDING!” So, how shamelessly cynical and dishonest must one be to blame this inevitable downgrade on the very people who have been shouting all along “stop spending”? Blaming the Tea Party for our credit downgrade is akin to Nero blaming the Christians for burning Rome. Tea Party Americans weren’t the ones “fiddling” while our country’s fiscal house was going up in smoke. In fact, we commonsense fiscal conservatives were the ones grabbing for the extinguishers while politically correct politicians and their cronies buried their heads in what soon became this bonfire.

Be wary of the efforts President Obama makes to “fix” the debt problem. The more he tries to “fix” things, the worse they get because his “solutions” always involve spending more, taxing more, growing government, and increasing debt. This debt problem is the greatest challenge facing our country today. Obviously, President Obama doesn’t have a plan or even a notion of how to deal with it. His press conference today was just a rehash of his old talking points and finger-pointing. That’s why he can’t be re-elected in 2012.

Our economic news is disheartening and the task before us can seem daunting, but we must not lose our sense of optimism. People look around today and may see only the negative. They see a culture and a nation in decline, but that’s not who we are! America must regain its optimistic pioneering spirit again. Our founders declared that “we were born the heirs of freedom.” We are the heirs of those who froze with Washington at Valley Forge, who held the line at Gettysburg, who freed the slaves, carved a nation out of the wilderness, and allowed reward for work ethic. We are the sons and daughters of that Greatest Generation who stormed the beaches of Normandy, raised the flag at Iwo Jima, and made America the strongest and most prosperous nation in the history of mankind. By God, we will not squander what has been given us!

She makes some key, commonsense points about what needs to be done:

  • Stop Spending
  • Cut taxes and red tape
  • Make energy cheaper

Listening, Julia?

Are There Apprentiships or Trainieships for Peopel in Your Inderstry?

A couple of weeks ago a Year Twelve student from the local school gave me a questionaire on employment in the IT industry.

That was one of the questions. Most of the others had similar errors.

I have two questions of my own.

1. Does the school check questionnaires, letters, etc before they go to members of the public?

Well, obviously not.

Or at least I hope it was not checked by a staff member, because if it was, our schools are even worse than I think they are.

2. How is it that a reasonably intelligent boy in Year Twelve has such appalling literacy?

If a person who is no dimwit can get through twelve years of schooling and have no idea how to spell or construct a sentence, what the heck has he been doing all that time?

And what have schools been doing with all my tax money?

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