Several of you out there have asked me if everything is alright with me since I haven't posted in a while. Just so all concerned parties know, I am alright. I have been very busy here at the end of the semester, trying to finish these classes and get all the necessary paperwork together and submitted to Texas Woman's University for my transfer acceptance. It's been nuts lately, but in a good way. So for your ocular and mental enjoyment, I submit the following...Hope you all like it!"Understanding Tax Cuts"
by: David R. Kamerschen, Ph.D
Sometimes politicians, journalists and the liberal left exclaim; "It's just a tax cut for the rich!" and it is just accepted to be fact.
But what does that really mean?
Just in case you are not completely clear on this issue, I hope the following will help. Please read it carefully.
Let's put tax cuts in terms everyone can understand.
Suppose that every day, ten men go out for dinner 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 ate dinner in the restaurant 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 meal by $20." Dinner 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 eat 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 eat their meal.
So, the restaurant 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 paid $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 eat 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 me!"
"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 dinner, so the nine sat down and ate 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 eating overseas where the atmosphere is somewhat friendlier.
David R. Kamerschen, Ph.D
Professor of Economics
University of Georgia
Here I come!
I'm baaaaack!! I got home yesterday from my brother's wedding in the frozen tundra of Idaho. It took 12 hours, but I have thawed out now. I'm so glad to be back home and to see that it's in the 60s here, when I left it was 10 degrees at 5:30 in the morning. Needless to say I was not a happy camper Friday morning when I left Texas, but I was even more unhappy when I landed in Pocatello, Idaho, and it was 1 degree. That's not a typo, it was really 1 degree at noon!! I'm not really sure why anyone would put up with that, but apparently a lot of people do. So the wedding went off without a hitch...correction--the wedding went off with a hitch! Jason and Jessie got married and it was beautiful. Her folks are the greatest people I've met in a long time. It's really cool when you meet one person and think, "Wow, they're great, they can't all be this great." Then you stand corrected, again and again. Jessie is a wonderful woman, I'm so lucky to have such a cool sister-in-law. Then I met her parents and realized where she gets it, they are such loving and accepting people. Then I met her sisters and grandparents and nieces and nephews, I'm telling you guys that the whole dadgum family is wonderful and sweet. I'm amazed. It was fantastic to travel from a warm climate to such a bitterly cold place, only to get around a family that was so loving, they just warmed us up inside and out. It made me aspire to be such a loving person, to be less judgmental. For a family of potato farmers from the country to accept a nose-pierced, tattooed city girl from Texas is inspiring. I love them. My brother is the luckiest man on Earth. Here are some pictures from the big day...
