I just got this in an email and thought you might enjoy ....


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I've never heard our crazy tax system explained any better then the story below.


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 a graded procedure,

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 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.



For those who understand, no explanation is needed.

For those who do not understand, no explanation is possible.

 

that about sums it up! i got a cousin that is getting back about $2,000 and is upset that it isnt enough. WTF! i would be happy to break even.

 

Paints an interesting picture.....

 

[align=left]Whats wrong??? It sounds like a PERFECT system to me.
I hate paying taxes just as much as the next guy, but it's probably better than no one paying any taxes at all. I don't mind paying for things that are necessary like roads, law enforcement, fire departments, the elderly and disabled, ect.. But, I don't like paying for programs that don't work. Speaking of things that don't work, I especially hate those that don't work just because they can't find a job that "pays enough" or their just to lazy. I shouldn't have to pay for someone elses stupidity or ignorance. They should have to wollow in their stupidity and ignorance ALL ON THEIR OWN. The other problem is that our system does not reward those who save. You get tax breaks and deductions for SPENDING money, not saving it. I know from a previous post that Mayfair gets screwed in this manor. [sm=rant.gif]
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Getting too much back from your income tax is NOT a good thing either. People forget that this is money that was theirs to begin with! $2,000 is basically $166 each month for the 2007 year. I don't know about you, but I could use the extra $166 each month. Put another way, I'd never let someone borrow $166 every month for 12 months and that they'd pay it back in one year without any interest. I wouldn't even do this for my friends. In a perfect world, your income tax refund should be as close to 0 as possible.

Of course, this assumes that the money he's getting back isn't part of the stimulus plan.

Anyway, good post Mayfair!

 

What really pisses me off about refunds is that the following year to have to pay "taxes" on your refund. If that money hadn't gone to them in the first place, you wouldn't be paying taxes on money you already paid tax on in the previous year. Greed, I tell ya

 

Huh? Who pays taxes on their refund? It's not income, so you don't pay income taxes on it. I certainly don't include withholding refunds as income on my 1040.

 

i guess what pisses me off the most is that he is a carpenter, gets paid cash, and only claims about half of what he actually makes. his wife doesnt work, they have 3 kids, are always broke (but always had plenty of "smokes" and beer)

 

Below is from the MN Department of Revenue. I itemized last year, so now I have to pay federal taxes on my refund. I used the web site looking for this info for you and discovered that last years info does not take into account the ammended State and Federal forms I filed last year.[:@] It shows my refund was $624, then I paid in $204 on my ammended form. So my "real" refund on their website should be $420. I'm writing $420 on line 10 of this years Federal Form 1040. It's what my tax software put in there for me. I hope I don't get a nice letter from the MN Department of Revenue telling me I screwed up. Their website is the one that is screwed up. Last year I received a letter that I owed some huge amount. I about sh*% my pants when I opened that one up. I called and asked what was going on. They pulled up my info quick and said, "opps, we made a mistake".[:@][:@][:@] I hate our damn complicated tax code.[:@][:@][:@]


What’s my 1099G amount?[/align]
If you itemized deductions on your 2006 federal income tax return, you may be required to include all or a portion of any Minnesota tax refund(s) you received in 2007 as income on your 2007 federal income tax return.

Use the total refund amount from your 2007 Record of Income Tax Refund, Minnesota Revenue Form 1099G, to determine the amount to enter on line 10 of your 2007 federal Form 1040.

Obtain the amount for 2007 by filling in and submitting your Social Security number below. Do not enter any dashes, spaces or periods between numbers. Correct example: 123456789.[align=left] [/align]

 

Now the damn website tells me my first try didn't post, but it did.
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