Tax System Illustrated by Beer Drinkers
I received an e-mail from my daughter that purports to explain how the US Income Tax system works in terms of ten men who gather nightly at their local bar to drink beer together. This has been around for a year or two but it's worth a read if you haven't seen it before. I found it on the web along with a rather clumsy and irrelevant attempt to refute the analogy. Truthorfiction.com has found that both David R. Kamerschen and T. Davies deny that they wrote the piece. Regardless of its origin, my opinion is that it is a relatively accurate but somewhat simplistic illustration of how our tax system works.
One of the reasons that many people don't understand how the tax system works is that they don't understand how percentages work. I kid you not. I see it quite often. One example is the willingness of diners to keep increasing the percentage of meal costs that they give to the server as a gratuity. We've seen it go from 10 to 15 to 20 percent. I've heard the argument that this is necessary due to inflation; that the servers need to get a raise along with everyone else. Huh? When a meal cost $10 and the expected gratuity was 10 percent the server got a dollar. When the meal went up to $15 the server got $1.50 at the old 10 percent rate. The server got a 50 percent increase in income just like the restaurant, and for the server it's all profit. But what really happened is when the meal cost went up to $15 the expected gratuity went up to 15 percent and the server got $2.25, a 125 percent increase while the restaurant only got a 50 percent increase in gross receipts.
We're a nation of suckers when it comes to income taxes and tipping.
Comments
Make a comment:
- Government is Friction
- We Have Too Many Experts
- Money is Not Wealth
- The Minimum Wage and Cotton Pickers
- Arizonans React to San Diego Boycott
- Let's Use Afghanistan as an Entitlement Testbed
- Socially Disadvantaged Farmer or Rancher
- Even Charity is Not Always a Good Thing
- Why Not Give Universal Footwear a Try?
- Supporters of New Health Care Acts Disingenuous
- anhinga on The Minimum Wage and Cotton Pickers
- Carson on The Minimum Wage and Cotton Pickers
- anhinga on The Minimum Wage and Cotton Pickers
- Carson on Arizonans React to San Diego Boycott
- anhinga on Arizonans React to San Diego Boycott
- anhinga, 31 July 2010
- Carson, 19 June 2010
- Liquid Egg Product, 18 June 2010
- Carson, 02 May 2010
- Liquid Egg Product, 01 May 2010
- Anhinga
- Carnival of Climate Change
- Ekawaaz
- Flashpoint
- Florida Cracker
- I Can Plainly See
- Ironic Surrealism
- Liquid Egg Product
- Ms Understood
- The Hatemongers Quarterly
- Truth, Lies and Character
I've always said this about the state's haul on gas taxes. Shouldn't Florida and other states be rolling in dough now? Along the same line, school boards yelled about the cost of burgeoning school enrollment. Now they are squealing that State funds are lower because enrollment is down. Shouldn't they view this as an opportunity to save money based on their prior arithmetic? Perhaps they need to go back to class.
It's my understanding that taxes on fuel in Florida are a fixed amount per gallon -- not a percentage of the cost. So the state may be getting a little less revenue from that source since people have cut back some on their driving.
But I agree with you on the school tax and other ad valorem taxes. Our area of the state had a large growth spurt over the last decade or two. At one point the county officials announced that they would probably have to raise the millage rate on assessed property to be able to provide services for all the additional people. I asked if all these new people were living in tents. There was actually a home building boom to provide homes for all the new residents which added to the total property assessment in the county and to the total taxes collected. There was no real need to raise the millage but the "authorities" didn't want to pass up a chance to pull one over on the people.