Thursday, July 24, 2008

"When the people find they can vote themselves money, that will herald the end of the republic"

Although found nowhere in the national archives or known writings of Benjamin Franklin, it is widely accepted that he once said “When the people find they can vote themselves money, that will herald the end of the republic.”

According to the most recent data from the Congressional Budget Office, the bottom 50% of all income earners pay just 3.4% of the taxes collected! Conversely, the top 20% of income earners pay a whopping 85% of the taxes collected. In other words, 80% of income earners contribute a miserable 15% of the taxes collected! When you consider that this lower income bracket is totally dominated by politicians that overwhelmingly favor wealth redistribution, Americans are now able to “vote themselves money.” One is left to wonder if we have already begun to “herald the end of the republic.”

Let’s not forget plank number two in Karl Marx’s ten planks toward communism in his Communist Manifesto, which is “A heavy progressive or graduated income tax.” Years ago, I came across a great analogy to our system of taxes. The story has been printed and e-mailed many times in different formats, but the basic concept remains unchanged. Although the origins of the story are unknown, everyone agrees that the good ole federal government clearly provided the inspiration.

Here it is:

Every evening, the same 10 friends eat dinner together, family style, at the same restaurant. The bill for all 10 comes to $100. They always pay it the way we pay taxes:
• The first four are poor and pay nothing.
• The fifth pays $1.
• The sixth pays $3.
• The seventh, $7
• The eighth, $12.
• The ninth, $18.
• The 10th, (the most well-to-do) pays $59.

One night the restaurant owner announces that because they're such good customers, he's dropping their group dinner bill to $80. Let's call that a tax cut. They want to continue paying their bill as we pay taxes. So the four poorest men still eat free. But if the other six split the $20 tax cut evenly, each would save $3.33. That means the fifth and sixth men would end up being paid to eat. The restaurant owner works out a plan: The fifth man eats free; the sixth pays $2; the seventh, $5; the eighth, $9; the ninth, $12; and the 10th guy pays $52. All six are better off than before, and the four poor guys still eat for nothing. The trouble starts when they leave the restaurant and begin to compare what they reaped from the $20 cut. "I only got a dollar of it," says the sixth man, "but he (pointing at No. 10) got $7." The fifth guy, who also saved a dollar by getting his meal free, agrees that it's not fair for the richest to get seven times the savings as he. No. 7, grousing that the wealthy get all the breaks, points out that he only got two bucks. "Wait a minute," the first four poor guys yell in unison. "We didn't get anything at all. The system exploits the poor!" The nine men jump the 10th and administer a severe beating. The next night he doesn't come for dinner. They shrug it off and eat without him. The customary $80 bill comes. Surprise! They're $52 short.

Yes, those who pay the most taxes get the most back from tax reductions. But tax them too much — punish them for the wealth they may have — and they just might stop bringing their money to the table.

I guess this is why American businesses have about $10 trillion in offshore deposits. You can’t blame them. After all, they got tired of getting beat up to forfeit their “fair share.”

8 comments:

calidor said...

I love your analogy and will be using it quite often.

I just posted it to my blog at http://calidor.livejournal.com

Anonymous said...

Thanks so much for posting that! Keep speaking up! We're out here!

Dillon said...

Hey nice job- I also linked to your story http://homeschoolr.co.cc/page.php?8

Stuart M. Van Tine said...

Chuck: With your permission, I would like to use some or all of your 10/23/08 post in a political book I'm writing. I'd give full attribution, of course, plus an autographed a copy of my novel. Please let me know by e stuvantine@aol.com

Anonymous said...

Great analogy. Great quote. Great post.

pdburk said...

Ive been looking for the Franklin quote about democracy NOT being what the Constitutional Convention wanted to generate, but a republic. The Founding Fathers understood the dangers of a democracy.

Very good stuff. I'm going to post this on my facebook page.

Anonymous said...

Current taxes are actually worse (better?) than the story. According to the National Taxpayers Union (http://ntu.org/tax-basics/who-pays-income-taxes.html) the top 10% pay 69.94%, and the top 50% pay 97.30% of Federal personal income taxes.

Anonymous said...

Thank you for posting this!!