How is it that no one seems to understand the concept of a tax percentage?

Why is it that everyone assumes that those that make more money don't pay their share of taxes? True, there might be loopholes that allow them to sidestep taxes (and I am all for plugging each and every one of those); but since you pay tax based on a percentage of your income, the more you make the higher your taxes become. Actually, the wealthy (top 10%) pay more taxes than the entire rest of the nation combined. Why should they pay even more? Should the top 1% pay more than the rest of the nation?

U.S. Tax System Explained in Beer
by: David R. Kamerschen, Ph.D.Professor of Economics
University of Georgia

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 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 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 times more than I!'

'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 (the richest) 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, 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
drinking overseas where the atmosphere is somewhat
friendlier.

Yes.
When I think of the top 10%, it is more so the corporations that they own versus their personal income, which is rarely truthfully depicted when paying taxes. Specifically when you can forgo a salary for year end bonuses and stock options etc.

I think that the free market system that we relate to our taxing system is the problem. If we say that the top 10% are the "same" as the bottom 10%, we are wrong. The loopholes are another big problem, many of them cannot be taken advantage of by someone who makes $30k a year.

We can compare it to the household dynamic. If mom made 90% of the wealth, then mom gets 90% of the meat loaf while everyone else gets to divide the remaining 10%. Mom stays fat and happy and everyone slowly starves to death. If mom contributes more then she gains more, a happy and healthy household that can then support her.

The rich can only stay so for so long. If we all drop off, then whos paying those dollars their getting rich off of?

We are part of a society as willing participants. In choosing so we are willingly giving up certain rights or freedoms. If we are expecting more, then we have to give up more.

I am currently paying 33% of my income in taxes as a small business owner. I make no where near the money the 1% your talking about, but I have gained certain freedoms and conveniences as a business owner. I could make just as much money working for some corporation and only be paying personal income taxes, but I have to give up those freedoms and rights I have gained in producing my own income.

The deductions are kind of like asking, "Other than that Mrs Lincoln, how was the play?" We don't have a straight percentages because of the deductions.There in is the problem. Warren Buffet ran some calculations on his tax rate vs that of his secretary. As a percentage his secretary paid more. His position is that his taxes should go up!

You mention the term "wealthy." But that is irrelevant because in the federal tax code "wealth" is not taxed. What is taxed is "income" and they are far different things. Say I had $10M and kept it a checking account and I spent my time traveling around wining and dining. My income would be zero so my taxes would be zero. Is that fair?

There are plenty of loopholes that can reduce the taxable income of the very wealthy. The key, however, is that for people with lots of assets, stocks, etc., a large chunk of their income comes from capital gains, which are taxed at only 15% as opposed to the highest bracket of close to 50%. Thus, when all is said and done their "actual" tax rate is significantly lower than the bracket they're in, even if they make tons more than the cap for the next lowest bracket.

And yes, I think the progressive tax system is just. It makes economic sense to glean the most you can from the highest earners because it will net more revenue while not causing undue hardship. I'm a big believer in the free market, and the American Dream of working hard and getting rewarded. But the free market can be grossly flawed, as is the case when a CEO has an income of fifty million dollars for doing the same amount of work as one of his lower employees at $50,000. They're not doing $50million worth of work, in other words; the system allows this because of the nature of corporations and how boards and executive offices are set up, and how those who are at the top often scratch each others' backs (I'm on the board of the company that you're the CEO of, and you're on the board of the company that I have stock in, &etc.....that's not even to suggest that there's anything nefarious going on; just that the way it's set up allows for a grossly disproportionate portion of revenues to be enjoyed by a few top-level people without any real justification for it. It's just not a reasonable system from an objective standpoint. So, yeah, i don't mind taxing them more. Besides--who the frick needs a billion dollars, really? The excesses of capitalism can be absurd, and some sort of spread-the-wealth mechanism is warranted.

You're right they pay a percentage of their income and they are generally, but NOT always in a higher tax bracket. Warren Buffett the billionaire is in a LOWER tax bracket than his secretary because most of his income is capital gains which is taxed at the very low rates (Bush reduction) of 10-15%. McCain wants to totally eliminate capital gains. So the billionaires, ok let's make them multimillionaires due to stock market declines, pay a VERY low percentage of their income in taxes due to the type of income they have. Wages are ordinary income and go according to tax bracket. The capital gains from making a killing in stock market are taxed at the same rate as those at the top of the poverty-stricken heap. Warren Buffett doesn't think this is fair, nor do I.

And the same percentage for a millionaire and a lower middle class person has a much STRONGER negative impact on the lower income person because of his MUCH lesser amounts of disposable income.

it's the deductions and as you say loopholes that reduct the percentage.

I have also thought about this because i am studying business at Hull University in the Uk our lectuer spoke to us about this its because people dont pay attention to the minor detail of busines, they only see the big money side of things. For a person liek your self open to see all asoects of business it shows that some people have common sense to look at all parts and see every where the tax system can catch every one out.

Yes, they consume the most.

This concept that if your are wealthy that you pay more than the entire rest of the nation combined is a false statement.

Cindy McCain made 4.2 million dollars and she paid only 26%. Why is that if the top rate is 35 %

A lot of wealthy people are able to shield a lot of their income from taxes
by investing in things that defer their tax liabilities.

You need to do your homework

The simple explanation is most people are drinking the Koolade. The liberal media has turned the lazy, union sycophants and MTV crowd to getting their information from 'E' TV, PEOPLE magazine and their peers. Not to mention the Democrats promising them the moon.

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