# Blog Archives

## The Tax System Explained in Beer

Howdy folks, it’s getting near tax time again!  Enjoy this little gem from the archives while you itemise your deductions.

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 ? 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 h 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.

David R. Kamerschen, Ph.D.  –   Professor of Economics. (via Independent Journal Review)

## “What at first was plunder assumed the softer name of revenue.”–Thomas Paine

I just spent the past 4 hours working on my tax returns.  At first thought, I was wary that I would have to pay some \$400 to the government, but as I went back over some forms, I was glad to have not only wrestled that \$400 away from Big Brother, but another \$400 in my favour!  Unfortunately, I owe the State of Georgia some \$200 in unpaid income taxes from when I was drawing unemployment compensation last year.  C’est la vie, you can’t win everything–especially when you’re dealing with our imperial overlords.  My advice to all of you, is to pay attention to who you’re sending to “represent” you.  Taxes are the main stage as they affect all of us, but pay attention to how your elected officials handle other matters:  eminent domain abuse, immigration legislation, local ordinances, etc.

To address taxes in more detail, pay attention to how your tax dollars are allocated both locally and nationally.  The idiot residents of my home, Cobb County, recently ok’ed a new SPLOST tax to improve roads, build crosswalks, etc., oh yeah, and by the way, we’re gonna take that money and *ahem*renovate the county jail.  Funny thing is, the referendum only passed by a simple numerical majority–the snooty rich part of town had all the “yes” votes at a scant few precincts, while the rest of the county (the true majority) voted overwhelmingly “no.”  I find amusement here because it’s the opposite of the common example of ignorant tirades against the electoral college (“I won the popular vote, so I should be the winner!”).  I could go all night into the differences between the two situations and into why I believe that we should reform the federal structure of our governing bodies, but that’s for another time.

One final note:  check out ideas on tax reform.  My personal favourite is Congressman John Linder’s Fair Tax, a system that replaces all current tax liabilities with a simple national retail sales tax.  It’s easy, and your dollar ends up going a lot further.  Not to mention boosts to the national revenue from foreign tourism, massive economic growth due to eliminating business taxes, and illegal aliens will finally have to support the country that they so pervasively exploit!  Do a little research and come up with a plan that you think will help–anything is better than the 16,845-page train wreck we have now.

Atari out.

## Hypothetical Situation….

Suppose you’re just going about your daily life when a man comes into your house with a gun and demands that you give him money or he will shoot you. Armed robbery, right? Grand theft, felony breaking-and-entering, felony weapons charges, not to mention that you’re now out of a good chunk of your hard-earned cash.

Doesn’t sound very fair, does it?

Now, let’s replace “a man” with “the government,” replace “a gun” with “a federal mandate,” and replace “money” with “30% of your annual income.”

Does it sound a little more fair? It shouldn’t. It’s the exact same principle. The federal government forces you, at the threat of legal action and excessive fines or a prison sentence, to give them money that you earned fair and square. On top of that, your state government does the EXACT SAME THING! Not only do they take money out of your paycheck before you even get it, but they also raise the price of goods and services that you purchase by levying taxes on the companies that make those products (which are just rolled-up into the retail cost) and by throwing a sales tax on top of that!

Now, I understand that the government needs money to function. It needs money to pay it’s hundreds of thousands of high-school-diploma-holding employees. It needs money to buy those bitchin’ F-22 Raptors (which, by the way, are AWESOME PIECES OF MACHINERY!!!!) It needs money to pay our men and women in uniform to keep defending this great land. It needs money to pave the roads that you and I drive on. I understand this. However, I don’t think it is necessary that we have money taken out of our paychecks before we even get them!

Not only are our paychecks being raided, but the more money you earn, the more you’re taxed! This is a pure and simple Communist philosophy. Now, I don’t know about the rest of you, but Communism is not my ideal social structure. I like the ability to pull myself to a higher standard of living, and to make my own choices about my life and my future. Likewise, I want to be able to save and invest my own money the way I see fit. I could invest money in the free market and generate a return for myself while I’m helping to drive the gears of the American economy. This is the way capitalism works, and if these United States are to remain free, we need to have this basic economic right. Unfortunately, the big, all-wise, all-knowing federal government thinks that if they can take a little off the top, no one will ever know the difference.

Take a look at your pay stub. How much money do you make? \$6 an hour? \$7? This is your gross pay. This is the amount of money you SHOULD be bringing home. Do the math, though. Your paycheck is not written for the amount of hours you work times your rate of pay. The fed is clipping off about 25-30% of your actual money for themselves. Now, you don’t plan on working for just over minimum wage for the rest of your life, do you? Think again. People who make more money get even more (30-35%) taken away. In other words, let’s just all go back to flipping burgers at McDonald’s because if we try to make anything more of ourselves, we’ll be robbed blind by our elected Overlords.

Take a look at what T. Coleman Andrews, former commissioner of the Internal Revenue Service (1953-1955), said of his own workplace:

“Congress went beyond merely enacting an income tax law and repealed Article IV of the Bill of Rights, by empowering the tax collector to do the very things from which that article says we were to be secure. It opened up our homes, our papers and our effects to the prying eyes of government agents and set the stage for searches of our books and vaults and for inquiries into our private affairs whenever the tax men might decide, even though there might not be any justification beyond mere cynical suspicion.

The income tax is bad because it has robbed you and me of the guarantee of privacy and the respect for our property that were given to us in Article IV of the Bill of Rights. This invasion is absolute and complete as far as the amount of tax that can be assessed is concerned. Please remember that under the Sixteenth Amendment, Congress can take 100% of our income anytime it wants to. As a matter of fact, right now it is imposing a tax as high as 91%. This is downright confiscation and cannot be defended on any other grounds.

The income tax is bad because it was conceived in class hatred, is an instrument of vengeance and plays right into the hands of the communists. It employs the vicious communist principle of taking from each according to his accumulation of the fruits of his labor and giving to others according to their needs, regardless of whether those needs are the result of indolence or lack of pride, self-respect, personal dignity or other attributes of men.

The income tax is fulfilling the Marxist prophecy that the surest way to destroy a capitalist society is by steeply graduated taxes on income and heavy levies upon the estates of people when they die.

As matters now stand, if our children make the most of their capabilities and training, they will have to give most of it to the tax collector and so become slaves of the government. People cannot pull themselves up by the bootstraps anymore because the tax collector gets the boots and the straps as well.

The income tax is bad because it is oppressive to all and discriminates particularly against those people who prove themselves most adept at keeping the wheels of business turning and creating maximum employment and a high standard of living for their fellow men.

I believe that a better way to raise revenue not only can be found but must be found because I am convinced that the present system is leading us right back to the very tyranny from which those, who established this land of freedom, risked their lives, their fortunes and their sacred honor to forever free themselves…”

A better way has been found.

Instead of taxing economic production (which hinders economic growth and development), why not tax consumption? It’s plain and simple:

1. Put back the money that the government has been taking out of your paycheck. = You get more money to do with as YOU CHOOSE.

2. Take away taxes on businesses. = The price of goods goes down.

3. Institute a retail sales tax. = If you want to buy things, you help fund government. If you do not want to buy more than is necessary to survive, you don’t pay money to the government.

4. Take away taxes on investment income. = If you choose to save and invest your money, you do not fund the government, but do continue to drive the economy.

The way I see it, in the end, the Fair Tax, as it has come to be called, will be a win-win situation for everyone. The government still gets funded, we the people get to keep our rightfully-earned money to do with as we choose, and the economy becomes stronger because there is more money to go around without having to print it–thus slowing inflation. Since business will no longer have to pay taxes, more industry will come to our shores to take advantage of our labour force, which means more jobs for Americans. It also means that it will be easier to start a business in this country, allowing more Americans to realise “The American Dream” of being their own boss, thus keeping the economy moving. With more money coming in, it will be easier to save that money and not live paycheck to paycheck like so many Americans (including myself) do.

This whole issue is a good thing, but we have to do our part. I’m doing mine by researching the subject matter, becoming involved by telling my elected representatives what I want to see them do for me, and by spreading the word in this forum. I invite all of you who read this to find out for themselves what the Fair Tax is all about. Sign a petition, call or write your congressmen, and just tell people about it! I also invite you to bring me any questions or comments or criticisms you may have, and I will do my best to give you an answer. Have faith in the system, my friends, because if you know how to play the game, you can make it work.