Taxation Explained in a way that you guys can understand......

[a kennedy]

Got this in an e-mail this morning.....


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. '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 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 everyone'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 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 pay $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 drink 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 t imes more than I did!'

'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 drinks, so the nine sat
down and had 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, ladies and gentlemen, 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 drinking oversea s where the atmosphere is somewhat
friendlier.

David R. Kamerschen, Ph.D.
Professor of Economics
University of Georgia

For those who understand, no explanation is needed. For those who do
not understand, no explanation is possible. DK


I hate these e-mails.....

[jimshoes]

1. That showed up here last week

You can search for the thread if you want to. It's here some place. One thing I think I read was that the fellow who's name appears on that e-mail claims no part of it.

[a kennedy]

2. Thanks jimshoes,

I'll look for it. :pals: and sorry for posting it again.

[King Coal]

33. I saw that years ago.

[Uben]

3. Warning Will Robinson !

this does not compute!!!

If all ten go out for a beer, that's ten beers. The bill comes to $100. That's ten bucks a beer! It aint that bad in America, yet!

This also assumes that 40% of Americans pay nothing. Another non-fact!

Then, it assumes the tenth man, or the richest, simply quits. How do you quit paying taxes? (can I have that in writing?)


And finally, in America, if the richest man gets beat up, he hires an army to go kill the bastards that beat him up ! Now granted, this would double his cost for beer, but he could drink in peace, knowing he was the only one left to drink beer!

[El Pinko]

4. No mention of the fact that the tenth man works the same hours and gets paid 1000X more...

Or that the tenth man owns 90% of the ten-person microcosm's wealth/property, or the fact that the tenth man only pays taxes on his income ABOVE X dollars (not everyone understands the concept of marginal tax rates).

Or that ALL of the men are taxed on their purchases equally in the form or sales taxes, or that the bottom 9 men all get taxed the same for payroll tax, but the top man gets taxed on a much smaller portion of his income....

David Kamerschen (if there is such a person) can bite me.

[ileus]

9. that 10th man averages 60hrs/wk at least...

[El Pinko]

10. Lots of people work 60hrs. per week.

Most of them don't make anywhere near the top 10% of income. Lots of them make minimum wage.

And working 60h/week doesn't justify 1000X higher salaries, nor does 4 or 8 years of education, even at the best schools.



Japanese CEOs make about 40X the average worker's salary, for comparison's sake...

And a lot of wealthy people don't work at all - their money works for them.

[JHB]

12. David Kamerschen is real, but he didn't write that crap

See below.

This is a standard tactic with RW e-mail propaganda fables, attributing their own load of crap to someone a highly-respected background. If you see any anti-Clinton stuff alleging to be by WW2 hellcat ace Hamilton McWhorter, SNOPES reports he denies any connection with that junk too.
---------------
http://davidk.myweb.uga.edu/

David R. Kamerschen

Complete vitae available online. Contrary to Internet folklore, Dr. Kamerschen is NOT the author of "Tax Cuts: A Simple Lesson in Economics." Additionally, he does NOT know who wrote it.

DR. DAVID R. KAMERSCHEN is a Distinguished Professor of Economics and holder of the Jasper N. Dorsey Chair at the University of Georgia, Department of Economics, Brooks Hall, Athens, GA 30602-6254, Phone [phone]; Fax [phone] or [phone]; e-mail [email protected]. He resides at 3818 Sweet Bottom Drive, Duluth, Georgia 30096-1416, Phone [phone]; Fax [phone]; e-mail [email protected]. Professor Kamerschen was born in Chicago, Illinois. His education is as follows: B.S. 1959, Miami University, general business; M.A. 1960, Miami University, economics; Ph.D. 1964, Michigan State University, economics. Dr. Kamerschen was a Graduate Assistant and Instructor at Miami University; Assistant Instructor at Michigan State University; Assistant Professor, Washington University; Associate Professor and Professor at the University of Missouri; and, since 1974, has been at the University of Georgia where after serving two terms as Department Head, is currently a Distinguished Professor. He has also acted as visiting professor at L"Université Jean Moulin in Lyon, France for four years (1992, 1995, 1997, 2001) at the University of Lodz, in Lodz Poland for one year (1992), and Professor in the University of Georgia Study Abroad Program, University in Avignon France (2001). He is the recipient of the national Outstanding Educator of America award several times and has been selected for a number of the University of Georgia teaching awards.

Professor Kamerschen is the author or editor of 10 different books (some with several different editions). He is the author or coauthor of Intermediate Microeconomic Theory (South-Western, two editions), Principles of Public Utility Rates (PUR, one edition), Economics (Houghton Mifflin, one edition), and Money and Banking (South-Western, six editions). His textbooks have been used at numerous colleges and universities both in the United States and abroad. He has received many comments and suggestions from professors, students, businesspeople, and other users each year which help keep his textbooks current, practical, and realistic as well as theoretically correct.

He has also penned over 200 articles in professional business, economics, financial, legal, and statistical journals including a number on topics in industrial economics, antitrust economics, and regulatory economics. He has served as editor, member of the board of editors, consulting editor, reader for about twenty (20) professional journals.

[Elspeth]

23. Does he know his name is being attached to this email?

Someone should contact him.

[JHB]

25. Yes, he knows. See above: he has a disclaimer on his page n/t

[fasttense]

5. If only taxes were really that simple minded.

What everyone fails to note is that no matter how little you earn, you still pay FICA (and sales tax) unless of course you earn more than about $95,000 a year. Now how is it that people can go around pretending to do fair comparisons by stating the poor don't pay anything?

My daughter made $7,000 last year but she still paid FICA. Yet the wealthy get their Social Security even if they pay NOTHING over their $95,000. How does that correlate to the poor paying nothing? The example is rigged from the beginning.

And of course they don't mention that the wealthy man made his millions by selling sub-prime loans to people who couldn't afford them. They fail to mention anything that might contradict their imaginary theories.

Bunch of crock is all it is. It's like the idiot who said he had a trade deficit with his grocer and it never hurt him. Well duh, if you started printing dollars from out of your basement then maybe, just maybe, the comparison would be rational.

[mmonk]

6. You need to email them back and tell them

wage earners carry the heavy lifting.

[ThomWV]

7. Horseshit.

[Orsino]

15. Yep. No way the rich guys are ever going to have a beer with the little people.

That only happens in MSM fantasy polls.

[ProfessorGAC]

26. A Perfectly Succinct Response To This Nonsense

Nicely summed up, Thom.
The Professor

[randr]

8. So lets look at the real costs

Assume the man paying $7 at the get go is earning an average wage of $50,000/yr.
He is paying approx. .05% of his daily earnings to pay for his beer.
The richest man paying the $59 tab we will give a modest $2.5 million/yr. income.
He ends up paying .00086% of his daily haul.
In the end the average wage earner is paying a rate that is 58 times higher than that of the rich man.

[sergeiAK]

11. The top ten percent of US households earns ~$125k on average

Nowhere near your "modest" $2.5m.

[JHB]

13. The guy making ~$125k wouldn't be picking up 59% of the tab, either

You have to get to the top 1%, or even top 0.1% to truly display the income distribution. The top 10% spreads it out far too much.

[sergeiAK]

18. He would not do so alone

But the top 10% of income earners do pay ~50% of the taxes. They make ~40% of the money, and with a progressive tax system, they will pay a higher rate due to making more. This is how the system is supposed to work. Someone making $125k isn't even in the highest tax bracket, that would be the 35% bracket, starting at $349,700 per year. $125k is an average, and it's skewed towards the lower end of the 10% group that it refers to because there are vastly more people making $100k than there are making $10m.

Useful link of the day:

http://en.wikipedia.org/wiki/Household_income_in_the_United_States#Quintiles "> Household Income

[JHB]

22. A request, sergeiAK,

As long as you're here correcting our math, how about noting all the ways the OP e-mail's characterization of the tax system is a distorted model of the actual system?

[sergeiAK]

27. I don't have that much time :p

I can try, but it'll be tonight. I have to get to Roanoke for a job interview.

[randr]

14. I believe it is the top 1%

whom are referred to in the analogy. The very people who have received the greatest tax cuts.
I do not believe that the top 10%, who may very well average $125k/yr, are paying 59% of the taxes.

[sergeiAK]

17. No, it's the top 10% referred to in the analogy

1 man, from 10. That's 10%. The top 10% includes the top 1%.

I swear, set theory escapes people for some unknown reason. Yay US education system.

Dollar-wise, the top 10% of income earners pay roughly 50% of taxes, because they make more, and are taxed at a higher rate. This is the basis of a "progressive" income tax, that the high-income earners pay more both percentage wise and absolutely than the lower income earners. This helps offset the tax burden on the poor, while aiming to provide for the needs of the country.

The guy making $125k is paying approximately 23% in taxes, with his marginal rate being 28%. This means he pays $29,111 in taxes, whereas, (for example) I paid $4435 in taxes this year, on an income of $32000. This means my tax rate is 14%, marginal tax rate being paid is 25%. I was taxed at a higher rate (and therefore will receive a hefty refund) as I was only working for 8 months last year due to being a co-op student, alternating a semester of work and a semester of college.

If the system were composed of the man making $125k and me, while I am half of the population, I pay roughly 13% of the taxes, dollar-wise, despite my tax rate being over half of his, which suggests I would pay ~40%, as my tax rate is roughly .6*his.

Now, for the tax cut. Again, we have me + the man making $125k. We'll call him Dave. The government cuts taxes across the board, by 20%. I now pay .8*$4435 or $3548. Dave now pays .8*$29111 or $23288. I still pay 13% of the total, despite his tax cut being larger than my tax bill. He still pays the larger share, as he still makes the larger share of the income.

[Selatius]

24. If you wanted to stimulate the economy, it would make sense to give money to the poor.

Classic Keynesian economic orthodoxy says that rather than give the bulk of the tax cuts to the richest who paid the most, take the money and divert it into programs to promote opportunity for poor people and relieve poverty as well as investments in infrastructure and health care. The velocity of money is such that diverting money directly to helping the poor makes more sense than simply giving rich people bigger tax cuts because it would take longer for money given back to the rich to "trickle-down" to any benefit for the people at the lower ends of the income ladder.

[sergeiAK]

30. Yes, that is the case

For an economic stimulus package, but giving money to people not paying federal income tax is unlikely to be very popular among those who do. And they vote. So we give it to everyone, in the interests of getting it through Congress and to make it appear more "fair". Taxation cannot ever be truly fair, and as such, we will always have debate on that matter. How that money is spent also matters, especially determining whether it stays in the US or goes abroad, but that's harder to divide amongst income levels.

Personally, I think we need to reign in federal spending first and foremost. Then we need to come up with a plan to reduce our debt, given current tax revenue. Then and only then should we consider tax cuts and additional non-essential spending. But that would appear impossible to get in this election. For all his problems, Bill Clinton had the right idea, but the end of the Internet bubble and inauguration of W killed our hope at a budget surplus for the time being. Sadly, I don't see that level of planning and resolve in the current candidates.

[Selatius]

34. Yeah, I agree with you as far as deficit spending.

It should be halted, and the path towards budget surpluses should be re-established. Unfortunately, barring an end of American involvement in Iraq, I fear we will continue to break the bank as far as military spending goes, which currently stands at over 600 billion/year now. It's sapping domestic expenditures to other government programs, and the continued borrowing is sinking the US Dollar.

At this point, I don't think Dems can get anything as far as universal health care passed unless they first generate surpluses in government cash flow, which could likely be achieved by letting tax cuts on capital gains expire and letting tax cuts on income above, say, 150K expire coupled with a 250 billion or perhaps even higher cut in military spending. The last, of course, is dependent on ending involvement in Iraq and the cutting of Pentagon pork projects, which Repubs will paint folks as being weak on defense and against the troops.

[gratuitous]

16. Analogy flawed from before the get-go

Ten guys go in for a beer, and the rich guy gets just one beer like everyone else? A more realistic scenario would have the rich guy taking all 10 beers, and the second richest guy would get to lap up any spillage. After powering down 10 beers, the rich guy would then spend the evening railing against the other nine guys for being lazy assholes while his underpaid hired goons relieved them of their wallets. Then he'd put the entire evening on a credit card and present the bill at the end of the month to his "pals."

[Selatius]

19. That's a fucking joke. First off, in America, the RICHEST pay LESS than the POOR

Warren Buffett himself said he paid lower taxes on his earnings, primarily through investment income, than his secretary, who likely derived most of his or her income through payroll income.

Maximum payroll income taxes are at 35%. Maximum capital gains taxes are at 15%. His Ph.D. apparently made him blind to the fucking obvious.

[JHB]

20. Whose PhD?

See above: the man whose name is at the bottom of the OP e-mail denies any connection to it.

[Selatius]

21. Yeah, unfortunately, I saw that only after I posted, but aside from that, the point still stands.

In reality, the rich man would pay less than everybody else at the table, and he likely would be drinking more than just one of the beers, likely the plurality or even majority of them, if you indexed his consumption of alcohol to the disproportionate benefit the wealthy receive from society compared to the median worker.

[walldude]

28. So was there someone moran out there who actually thought

that this bit of brilliant wisdom was actually written by a guy with a Ph.D in Economics? This is about as good as anything Glenn Beck has spewed on taxes...

[Gold Metal Flake]

29. Snopes investigates the authorship.

http://www.snopes.com/business/taxes/howtaxes.asp

[TahitiNut]

31. I like this retort, found on the Viral Grapevine....

In the US and throughout most of the rest of the world, the tenth man would have paid off a politician for $10 to get a beer subsidy of $30 per night (to create jobs for the bartender). Of this $30, $10 of course would have covered the lobbying expense, $10 would go in his own pocket, $1 would go to the bartender to keep his mouth shut, and $9 would go to the bar.

The Bar would give him a kickback of $10 each night for bringing in his 9 buddies to make them into alcoholics, repeat customers for life.

The Bar would then raise their prices to $130 citing inflation and higher taxes.

The tenth richest man would then secure his finances in a Dutch Holding Company managed by a trust in Ireland which invests in Chase and Bank of America. He would then explain to his buddies that he is as poor as the rest of them and can’t afford to pay himself as he cries into his beer that night citing his latest financial report which shows him to be broke on paper so that he doesn’t have to pay taxes in the United States ever again.

Citing his former generosity, the other nine men would agree that the tenth man can now pay nothing like the 4 poorest.

The others would then be faced with an adjusted amount of

* The fifth would pay $3.
* The sixth would pay $10.
* The seventh would pay $22.
* The eighth would pay $38.
* The ninth would pay $57.

Now the group would recognize that this is not fair and so would lobby the Government for an Earned Drinking Credit for the Poorest men. The government would oblige and give the four poorest men $2 each, but they would tax the 5th - 9th men $2 each as well.

* 4 men receive a total of $8 and 5 men pay $10.

The adjusted amounts would then look like this for all 10

* First Receives $2 pays $2 | Net 0
* Second Receives $2 pays $2 | Net 0
* Third Receives $2 pays $2 | Net 0
* Fourth Receives $2 pays $2 | Net 0
* Fifth Pay $1 to bar pays $2 to tax | net paid $3
* Sixth Pay $8 to bar; pays $2 to tax | net paid $10
* Seventh Pay $20 to bar; pays $2 to tax | net paid $22
* Eighth Pay $36 to bar pays $2 to tax | net paid $38
* Ninth Pay $55 to bar; pays $2 to tax | net paid $57
* Tenth Man: Tax Credit Received: $30 ;
Pays $10 to politician;
$1 to bartender;
Receives $10 from Bar
Net RECEIVED $29 per night and free beer

Of course this can not go on forever as the sixth, seventh, eighth and ninth men can’t afford to pay those rates forever. So they start paying with their credit cards held by Bank of America and Chase.

The tenth man would start demanding a higher Return on Investment from his investment managers, who would be hearing similar requests from all of their other investors. They would then expand their holdings into mortgaged back securities where a good deal more profit could be made.

Meanwhile the Fifth through ninth men are racking up debt on their credit cards from drinking every night, their health care costs are increasing as their liver fails, and they are also spending more on gasoline as they drink and drive as they can no longer afford to cab it.

Ultimately, they end up refinancing their credit cards into their house where they have equity. The mortgage broker promises them a 4.9% interest rate on the refinance which sounds good as their credit card interest rate is up to 21%. The broker promises them that they will not have to verify their income, provide W2’s nor copies of their tax paper work.

Their mortgage broker doesn’t tell them, but lies about the value of their house in order to refinance their credit and help them avoid paying private mortgage insurance. At their current income levels, and without verifying their income, their mortgage would be classified as Sub Prime and the interest rate would be 10.9%

The mortgage officer lies about their income levels as well to boost the internal credit scoring mechanism and get them financed, not at 4.9% but 5.9%, which is better than 10.9% and happens to pay the mortgage broker a higher commission than a loan at 4.9% that is not sub prime.

The mortgage broker also promises them a payment of $900 per month, but fails to mention the balloon payment of $50,000 in the 5th year and doesn’t mention the adjustable rates in year 3.

The men separately show up with a hangover and sun glasses on the date of their close for their new mortgages. They trust their broker and do not read the paperwork in detail flipping and signing almost as fast as they could raise a beer bottle to their lips.

The loan closes, the mortgage broker gets a fat commission, the bank securitizes the mortgages by selling them to an Irish Hedge Fund and pockets collectively a billion dollars in profits that year.

The hedge fund holds the investment for a year, shows a 35% gain on paper and starts selling shares to retirement funds and 401ks in the US that the Sixth through 9th men just happen to have the rest of their life savings sitting in.

The tenth man sees the writing on the wall, literally magic marker on a stall in the restroom of the bar.

“The end is Nigh”

He pulls his money out of the Irish Hedge fund invested in real estate and invests in Gold at $600 a troy ounce.

Meanwhile, he lobbies congress to tighten bankruptcy laws for credit cards which he still has a sizable investment in. Congress tightens bankruptcy laws and makes it impossible to absolve credit card debt, forcing people into chapter 13 where they must pay off the debt within 3 years or go to debtors prison where they can work it off in 7 years.

Gas prices are still going up so the President ignores a minor terrorist threat, allows the terrorists to blow up a major building and then goes to war with the terrorists home country where there is no oil, and simultaneously with a country that sits on 10% of the worlds oil reserves that has a decimated military infrastructure.

Oil prices shoot through the roof with Gold following close behind. The President whose family comes from oil barons make a fortune and become famous at their skull and bones country club outside of Yale.

Meanwhile our famous 10 guys, start paying even more money at the pump. The first 4 guys end up taking second jobs working at Wal-Mart and have to give up drinking at the bar so that they can try and beat their teenage kids out of a promotion.

The fifth and sixth guys get foreclosed upon. They were forced to stop paying their mortgage payments so that they could pay their mandatory credit card payments as required by the new bankruptcy law.

The seventh, eighth and ninth men all previously traded up their homes for McMansions that they can not afford with interest only payments of $2300 a month. When foreclosures start happening their plans on flipping their McMansions and cashing in on the equity slips through their fingers.

To make matters worse seven and eight get laid off from the companies they work for when their jobs get outsourced to China. The ninth man keeps his job at a law firm, but fails to notice that his 401k fund is slipping and has lost 10% in the last year. Things are looking up as his law firm seems on the edge of landing a big contract with Merrill Lynch.

Then the real estate crash and sub prime mortgage scandal erupt. Banks start dropping like flies to be saved not by the cash strapped government that can barely afford the war for oil any longer, but by China. Oil and Gold soar, Gold hits $900 a troy ounce and Oil hits $130 a barrel (about the same amount for 10 rounds of beer prior to the crash). Beer prices hold steady for the first few months, but then start to edge up as gas prices for delivery creep into the bar owners expenses.

Then the first four men one night remember their favorite bar. They sneak around back around 4:30 am and steal 50 empty kegs that just happen to be made of pure aluminum. Those kegs are now worth about half the value of a keg that is full in scrap metal prices or about $80.

They are not stupid and don’t want to get caught turning the kegs in at the dump where the police are already looking for keg thieves. So they head out to the closed down manufacturing plant where they used to work. They start a big fire, and melt down the aluminum into big messy aluminum splashes on the cement.

They turn in the aluminum for cash and get caught up on their back alimony and child support before heading back to work at Wal-mart where they now work for their teen age kids that beat them out for that promotion earlier in the month because their job skills weren’t as good as recent high school graduates. They then begin dreaming of new ways to find aluminum alimony allowances.

Meanwhile, the banks and mortgage companies lobby congress spending about $10,000 a head in an election year to bail out the economy. Congress provides the major banks with government backed loans to refinance the bad sub prime loans so that the government can personally guarantee those bad loans. They also put $100 billion of actual cash into the hands of Americans hoping to stimulate the economy.

Americans however, are all in debt up to their eye balls and use the extra $1200 they receive to make 2-3 credit card payments. They take the $300 for each kid and buy groceries for the month and then they start worrying about next month.

The banks get away free as they have Chinese financing now and no bad loans as they have refinanced them over to the US Government. The US government had to print more money to pay for all of these actions and so Gold goes up to $1500 a troy ounce.

The tenth man is now worth Billions and moves to Costa Rica to retire taking the new trophy wife that used to be the bartenders girl friend with him.

The first four men end up going to county prison for 3 months for stealing aluminum dog crap receptacles after running out of kegs to steal.

The fifth and sixth men end up living in an apartment and then homeless after they lose their jobs at Wal-Mart.

Click HereThe seventh and eighth men whom we previously left hanging in our story after they lost their jobs and ability to pay for their homes, end up losing their homes, and their kids. They and their spouses are each convicted of mortgage fraud by the FBI in a major sting operation after it is revealed that they lied on their mortgage applications. Their mortgage brokers who actually did the paper work cop a plea agreement in exchange for immunity with the Feds and rat out each of their unsuspecting customers.

The ninth man ends up losing his entire retirement fund which took a big hit as the dollar rapidly plummeted into free fall. He ends up refinancing his own house under a government backed loan for $650,000. Unfortunately, a tornado comes through that winter in a freak coincidence and levels the home. FEMA promises to provide assistance but never shows up and the ninth man freezes to death attempting to salvage the shreds of his belongings. His home insurance policy refuses to pay as they claim that his house was over valued and then they prove it with comparables studies from his own mortgage brokers database.

The tenth man ends up dumping his new bride a year later, moving back to the states a year after that when the US appears to have hit rock bottom and he leads up a Chinese real estate investment initiative in the states. He makes another $10 billion in ten years, but is then executed in Beijing for espionage.

Meanwhile, the bar tender goes on to win American Idol and sleep with Paula Abdul. They are now blissfully happy, doped up on anti-psychotics, and the biggest two idiots the world has ever seen.

http://www.viralgrapevine.com/how-tax-cuts-work-by-david-r-kamerschen-refuted-the-real-way-tax-work-removing-the-internet-garbage/

[Political Heretic]

32. Dear professor: 61% of all US Based Corporations paid ZERO DOLLARS in taxes

from 1999-2004.

How to earn $3.5 trillion and pay zero taxes
By David R. Francis

The April 2 release of a General Accounting Office report on corporate taxes could hardly have been better timed to get press attention. Just as millions of Americans were filling out their federal 2003 tax forms to beat the April 15 deadline, the GAO study indicated that most corporations owed no taxes from 1996 to 2000, a boom period for corporate profits.

Those untaxed corporations earned $3.5 trillion of revenues.

The GAO study found that 71 percent of foreign-controlled corporations operating in the United States paid no taxes in those five years; nor did 61 percent of US-controlled companies.

....

The basic corporate tax rate stands officially at 35 percent. In reality, it's far below that for most companies... Using data from the financial statements of publicly traded companies, the average effective tax rate was 12 percent in 2002, down from 15 percent in 1999, and 18 percent in 1995, according to a study by John Graham, a finance professor at Duke University's Fuqua School of Business.

http://www.csmonitor.com/2004/0419/p16s03-cogn.html

So this is more like how it works.

Ten men each go in and order ten beers.

The first person (the poorest) pays $1 and doesn't get a beer.
The second person (at 75% of the poverty level) pays $1 and doesn't get a beer.
The third person (at 100% of the poverty level) pays $1 and doesn't get a beer.
The fourth person (at 125% of the poverty level) pays $1 and doesn't get a beer.

That's called being poor and still paying regressive taxes, like sales tax.

The fifth person pays 14$ and gets a third of a beer
The sixth person pays 24$ and gets a third of a beer
The seventh person pays $36 and gets a third of a beer

That's called being middle class, not not having the overwhelming number of tax breaks to lower your effective tax rate.

The eighth person pays 15$ and gets 1 beer
The ninth person pays 5$ and gets 2 beers
The tenth person (the richest) pays 2$ and gets 6 beers.

That's called being rich, having the overwhelming majority of the tax breaks, shelters and loop holes, lowering your effective tax rate to BELOW that of the middle class.

But wait, that's not the end of the story. Then another person, named Joe MegaCorp comes into the bar, declares that he now owns the bar, takes the men's beers, throws out the bottom four men, and demands that the remaining six pay 799 dollars a piece to split one of the "new and improved" beers that is half water.