Dear Kossaks,
This is my first diary entry, so please be kind. As you know, lies and misinformation are constantly spread on email chains, including lies about Obama being Muslim, or not being patriotic because he didn't wear a flag pin once, etc. I have conservative family members, so I receive a fair share of them. Most of them are clearly flat out lies, and are debunked elsewhere. However, I received one email last week from my brother, who actually loves Bill Clinton, but told me he'll be voting for McCain this election cycle. The issue at the top of his mind is taxes, and his feeling is that the rich should not be "soaked" to pay for Obama's various promises. This email seems to sum up his thoughts on the issue.
Follow me past the jump to read the email:
Bar Stool Economics
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 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 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 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.
David R. Kamerschen, Ph.D.
Professor of Economics, University of Georgia
I think my brother actually believes this story, so I sent him a quick email in response:
Bill, (pseudonym)
This is bull crap, and you know it.
For one thing, sales taxes for everyone is the same. Those who pay more are not just getting "a beer." Officially, the federal income tax tops off at 35%, and is 10% for the poorest (http://www.moneychimp.com/features/tax_brackets.htm ).
But, it sounds like you must believe that there are no loopholes, tax write-offs, or tax shelters for the rich. Are lobbyists paid big bucks in DC because those that hire them don't get anything in return?
Here are a few places to start reading about what is really going on:
http://www.usatoday.com/...
http://www.sfgate.com/...
http://www.nader.org/...
The following day, my brother responded:
Of course there are loopholes and shelters that need to be fixed. I recently heard about the IRS cracking down on Swiss banks, which was a very popular place for cheats to hide there money.
But the point of the story remains true: A small minority pay the lions share of taxes. And, the more they get picked on, the easier it will be for them to leave the country, and hurt everyone down the line.
By the time he wrote this, I was getting quite exercised, since I think a lot of people believe this garbage. So I decided to write a longer email in response:
Bill,
The "point" of the story is not true. The richest Americans do not get the "same beer" as the poorest, they get far more. It is not worth worshipping the richest Americans because they are "giving" so much to the "rest of us." They take far more than they give. Whether it is benefiting disproportionately from an educated workforce, benefiting from the large consumer class in the US that serves as the "market," benefiting from the highways and airports, benefiting from the oil, coal, gas, rocks, and minerals beneath our country's soil, benefiting from the most fertile soil on earth, benefiting from the abundant forests, benefiting from the R&D in technology that is paid for by our military budget, benefiting from tax breaks and incentives, benefiting from government bailouts for failed businesses, benefiting from our nation's tarriffs and protections, benefiting from our nation's foreign policy of protecting "our interests" abroad, benefiting from the airwaves that are owned by the people, benefiting from the U.S. Constitution and the enforcement of law that has tremendous "buy in" from our people and has ensured stability, etc., etc., the rich benefit immensely.
If the current lot of the richest people left this country, our nation would still have all of these resources. In fact, if you have read the articles I sent, you can see that the richest bend over backwards to avoid paying their share of taxes (and the IRS, by the way, spend almost all of their resources going after those who make less than 100k). That, in my view, makes them criminals. Our nation would be better off, in fact, if these criminals left our country. The resources remain.
Now, what if the story was a little different? The four "poorest" men, who supposedly didn't pay for their beers, decided to stay home. They refused to harvest the wheat, refused to teach the children, refused to fly the airplanes, refused to drive the trucks, refused to build the roads and buildings, refused to cut the trees, refused to enforce the law, refused to put out the fires, refused to monitor the banks, refused to work the ports, refused to fix the computer viruses, how would the richest man feel without his beer?
Enough about how great the rich are. They need to pay their fair share and shut up about it.
Please understand that my brother and I have a good relationship but we like to argue about issues, and there is (usually) no bad blood. I know my tone is a little harsh here, but I don't think I was being overly rude. By the way, this exchange happened before the government bailout of AIG this week. Anyway, he read my message as if to say I thought rich people were evil (no one in our family is rich, by the way):
I morally can't argue that the rich shouldn't pay taxes. THEY SHOULD! I absolutely would be in favor of cracking down on ALL people who cheat this country by not paying their share of taxes (or none at all). But apparently there aren't enough resources to do this. Every year around April 15 I read and hear that less than 1% of all income taxes get audited by the IRS, and they only target high income earners. Think about that!
As far as the rest of your comments, I guess I don't hate rich people and worship poor people like you do. I would like to think I view everyone the same and respect their jobs, families, and circumstances equally. Just because someone is rich does not mean they are evil.
So I responded with this:
Bill,
Did I say the rich were evil? No, I did not. I said if they were not paying taxes they were criminals. And also, if they choose to leave this country, that is their decision. The author of your story was trying to get readers like me to feel bad about that. I don't.
Did I say I worship the poor? No, I did not. I'm saying that they contribute a lot to our economy. Further, they are making it possible for the rich to get rich. I'm not even criticizing that system! I'm just saying they shouldn't feel bad because the rich are paying more taxes than them.
As far as the IRS not having the resources to go after tax evaders, that's true, and that's because there is little political will to do that. So, while I agree with you, Bill, that the rich should pay taxes, there are enough people in this country who believe the kind of story that you sent--about it being so unfair that the rich pay more taxes--that there is not enough political "capital" to really go after tax evaders. That is a serious problem, in my view, and one of the reasons our country is almost 10 trillion dollars in debt: http://www.brillig.com/...
My brother ended the exchange with this email:
It sounds like we interpreted the story a little different, and maybe I'm reading between the lines in your comments.
We all agree that people should pay their fair share of taxes, so let's end it there.
So, what do you think, Kossaks? Have you received this email yourself? What would you write if you were exchanging emails with a neo-liberal brother who had said he was thinking of voting for McCain?