I've gotta stop reading Snopes.com...
“The democracy will cease to exist when you take away from those who are willing to work and give to those who would not.” — Thomas Jefferson
As the late Adrian Rogers said, "you cannot multiply wealth by dividing it."
An economics professor at a local college made a statement that he had never failed a single student before, but had recently failed an entire class. That class had insisted that socialism worked and that no one would be poor and no one would be rich, a great equalizer.
The professor then said, "OK, we will have an experiment in this class". All grades would be averaged and everyone would receive the same grade so no one would fail and no one would receive an A.
After the first test, the grades were averaged and everyone got a B. The students who studied hard were upset and the students who studied little were happy.
As the second test rolled around, the students who studied little had studied even less and the ones who studied hard decided they wanted a free ride too so they studied little. The second test average was a D! No one was happy. When the 3rd test rolled around, the average was an F. The scores never increased as bickering, blame and name-calling all resulted in hard feelings and no one would study for the benefit of anyone else.
All failed, to their great surprise, and the professor told them that socialism would also ultimately fail because when the reward is great, the effort to succeed is great but when government takes all the reward away, no one will try or want to succeed.
It seemed that 10 men decided to have a business lunch once a week. They always met in the same restaurant and the bill was always, $100.00, for all 10 men. If each man was responsible for his share of the bill that would be, $10.00, each. The men decided to divide the bill based upon their ability to pay (using the progressive structure of the tax code). Using this formula the following payment arrangement was worked out based upon income.
Men 1-4 who made the least amount of money paid nothing.
Man 5 paid $ 1.00
Man 6 paid $ 3.00
Man 7 paid $ 7.00
Man 8 paid $12.00
Man 9 paid $18.00
Man 10 paid $59.00
After several weeks the owner of the restaurant told the men that because they were such good customers he was reducing the bill by $20.00. Their dilemma was how to divide up the, $20.00. If each person got the same amount then the first 4 men would be getting money back but they never paid anything for the dinners. After much discussion and no resolve the owner offered the following suggestion which they all agreed to.
Original Payment-New Payment-$ Amount Saved-% Saved
Men 1-4 paid $ 0.00 $ 0.00 $0.00 0%
Man 5 paid $ 1.00 $ 0.00 $1.00 100%
Man 6 paid $ 3.00 $ 2.00 $1.00 33%
Man 7 paid $ 7.00 $ 5.00 $2.00 28%
Man 8 paid $12.00 $ 9.00 $3.00 25%
Man 9 paid $18.00 $14.00 $4.00 22%
Man 10 paid $59.00 $50.00 $9.00 15%
Once outside the men began to argue about the settlement. Man 5 said he only got, $1.00, while Man 10 received, $9.00. Men 1-4 were upset because the received nothing. They said that the cut only benefited the rich and the poor got nothing. They were upset so they beat up Man 10 and left him. The next week they met for lunch as usual except man 10 did not show up. When the new bill arrived the men discovered that between them they did not have enough money to pay even half of the bill.
In this story we see a simplified version of the Federal Income Tax. According to an article in the “New York Times” 80% of the taxes are paid by 20% of the highest earning income people. Any time you have a tax cut the people who are carrying the tax burden are going to get the money. The next time you hear of a tax cut and the media tells you that the wealthy are getting all the money, remember they are the ones paying the taxes.