The Tax Warfare Banquet

The top headlines on a CNN news site this morning were: "Chinese Astrology: What it Says About You", "40% Off: Preorder Next 'Harry Potter'", and "War With Iraq: Can It Be Avoided?". Gee, do you think war can be avoided? Maybe if we all put our heads together and brainstorm, we can figure out a way to make that happen. It's also nice to see that this news "story" has its proper place among these headlines. To be fair, the Iraq headline was between the other two, not at the bottom, and all three were under the headline "Hard cold in the East", so at least we have our priorities straight. Also tonight, I note that the State department is warning Americans overseas that they should be ready to flee. So at least the heightened sense of fear is being maintained.

Korea Watch

Joe Conason has an excellent article about the stupidity of the term "axis of evil" before its first anniversary, the bungling in the Korean situation and our inconsistency between the North Koreans and Iraq. But really, for a sharp guy like him, this is like shooting fish in a barrel. See "Korean Crisis Befuddles Bush". Note that this is a time-sensitive link.

Media Watch

We've noted before that Helen Thomas is a national treasure, and she is proving to be even more valuable in the face of this administration than ever before. This article gives some background on her and the various administrations she has covered. But the money shot is at the bottom of the article.

Dick Watch

Joshua Marshall has written a very interesting article about what may well be a huge gap between the perceived and actual competence of Dick Cheney. "Vice Grip" gives many examples where the most egregious mistakes and missteps of this administration can be traced back and laid at the feet of the Snarling One himself.

Iraq Watch

Please see "The President's Real Goal in Iraq". This is one of the most important articles written about what may be our actual policy in the region, and where those ideas come from. It also contains a rogue's gallery of Iraq hawks. This article will chill you.

Class Warfare Watch

Finally today, here is a little parable about taxation which I first saw when a conservative friend of mine blast-emailed it to me along with others on his mailing list many years ago. At the time, it struck me as incredibly misleading. Apparently it was recently also featured on Sean Hannity's radio show and website (Hannity, along with Rush and Bill O'Reilly, make up the unholy trinity of the most egregious and dangerous liars in the public discourse). And again, it has struck me as incredibly misleading. Have a look at this little item, which is no doubt designed to make rich people cry in their soup about their unfortunate place in our system. Discussion at the end.

The Truth about Taxes

by Anonymous

Let's put tax cuts in terms everyone can understand. Suppose that every day, ten men go out for dinner. 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 $7;
The eighth $12;
The ninth $18.
The tenth man-the richest-would pay $59.

That's what they decided to do. The ten men ate dinner in the restaurant 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 meal by $20."So now dinner for the ten only cost $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 eat for free. But what about the other six-the paying customers? How could they divvy up the $20 windfall so that everyone would get his "fair share?" The six men 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 end up being *paid* to eat their meal. So the restaurant 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 paid nothing, the sixth pitched in $2, the seventh paid $5, the eighth paid $9, the ninth paid $12, leaving the tenth man with a bill of $52 instead of his earlier $59.Each of the six was better off than before. And the first four continued to eat 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. "But he got $7!" "Yeah, that's right," exclaimed the fifth man. "I only saved a dollar, too. It's unfair that he got seven times more than me!" "That's true!" shouted the seventh man. "Why should he get $7 back when I got only $2? 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 he didn't show up for dinner, so the nine sat down and ate without him. But when it came time to pay the bill, they discovered something important. They were $52 short! And that, boys and girls, journalists and college instructors, is how the 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 at the table anymore.

Unfortunately, Liberals cannot grasp this straight-forward logic!

That poor 10th man!! I think we should have a contest and try to find all the fallacies in this analogy (and there are plenty)! I'll try to give a start here.

First of all, let's assume that the numbers given for proportion of total taxes paid are correct, though there is no reason to assume that they are. Every study I've seen shows that the rich are not taxed anywhere near proportionally to their income. That means that in this little parable world, that for every $100 dollars these men have in income, that the 10th man gets $60 or more, probably closer to $70. [As a side note, this scheme is surely based on income taxes, which the oligarchs love to quote from, but as we saw from the Times article yesterday, total taxes for people are actually at about the same percentage regardless of their income.] Anyway, this guy is totally loaded compared to the other 9.

Second, let's assume that the "dinner" is meant to symbolize services and benefits derived from the government - the other parts of these men's existence is in the private sector, where their lives will reflect their actual wealth, etc. So, some of them are dressed in rags, and a few of them are probably sick with consumption and homeless. For the poorest, the dinner may be their only chance to get inside out of the weather, and the only opportunity to eat. The 10th man, of course, lives in a fantastic mansion, surrounded by his bodyguards and servants, living a lavish and wasteful lifestyle.

Back to dinner. There is $100 worth of food served every night. The 10th man gets foie gras and osso busco, truffles, caviar, a bottle of expensive wine to himself, and sweet delicacies for dessert. He eats every crumb and drinks every drop. And licks the plates. The waitstaff dote on his every comfort. The other diners eat more modestly - a plate of liver and onions and a beer here, a nice sandwich and soda there - on down the line, until you come to where the first four are eating celery sticks, some bark, ice water, maybe a little gravel for roughage. Because, make no mistake about it, the rich get much more benefit from the government than the poor do. For example, some of our tax money goes to regulate the airline industry for safety. If you're too poor to ever take a plane, you don't ever benefit from that. Our taxes build roads, but if you are too poor to own a car, that doesn't benefit you. Our taxes fund the FDIC, meaning up to $100,000 of our savings accounts are federally insured, so the richer you are, the more benefit you get from that. Tax-funded police defend the property of the rich, and our tax-funded military defends the interests of the wealthy overseas. And the freeloading poor? Sometimes they get some money to help pay their fuel bills in the winter (not this winter, though). Sometimes help buying food. Sometimes reduced rent. It is nothing compared to the way the interests of the rich are protected and pampered.

Now, back to the story. The next development is that the restaurateur cuts $20 off their bill. This is a false analogy to the way tax cuts work, so let's clear this up. First of all, mainly because of the 10th man's wine, the restaurant usually serves more than $100 dollars worth of food each night, and has been taking a steady loss. But he is now willing to feed them for $80. Maybe #10 has been complaining about his bill, and has bribed the waiters to agree with him. Maybe the owner is hoping to die before his debts catch up with him, and leave the mess to his son. Most likely he is borrowing money from man #10 to make up the difference, which he will have to pay back with interest. In any case, he has to provide the same meal he did before for a much lower cost, meaning either he will have to go into much more debt much more quickly (man #10, the creditor, doesn't mind this a bit), or he will have to cut back. Maybe he will fire the maitre'd. Maybe the sandwiches will get a bit thin. But the tenth man will most assuredly not notice any change in his menu. He would complain most bitterly if he did, and blame it on the celery at the other end of the table.

That the 10th man expects any benefit from the tax break at all is a little hard to believe.

Then the tale crosses the line from profanity to absurdity. The 10th man gets beat up by the other nine. If this is an allusion to some civil uprising in the US against the rich, I've never heard of such a thing. If it is just the other nine being angry at man #10 for being rapacious and self-serving, then my heart breaks for him. And what does "not showing up for dinner" mean? If it means that the rich will stop taking any benefits from the government, then good on them. But unless the tenth man moves clear to the next town, you can bet he will continue to show up faithfully for his dinner. He might refuse to pay, but he will be there for the food.

Those dumb Libruls just don't get it.

Now, I don't fall into the fallacy of rich people all being evil or poor people being all noble and humble, etc. But I wish the rich would stop feeling so damn sorry for themselves that they have to pay a few taxes, and shut up already. And I really really wish that they would stop trying to bribe all of our public servants to agree to change all of the groundrules and laws in their favor. If they could pay happily for their wonderful dinners, maybe buy a little something extra for the other end of the table because it is the right thing to do, then that would be a story worth telling.