Wingnut Letter

Got this in the e-mail today:

You are a nut and belong in a nuthouse…. obviously you don’t know anything about business or economics. Look at the historical tax rates and compare it to recessions and depressions here in the US. By overtaxing the people, it only creates less investment. God where did you go to school and how can someone be this dumb in a land like America. If I as a businessman have more money not taxable, DUH, I spend it on investments which hire more people who get paychecks and guess what idiot….. they then pay more taxes. Take you anti liberal, anti American left wing communist thought to another country. We have had enough of you and the garbage you throw out. Academically if you cannot understand maybe the joke below will give you some foresight.

Sometimes Politicians can exclaim; “It’s just a tax cut for the rich!”, and it is just accepted to be fact. But what does that really mean? Just in case you are not completely clear on this issue, we hope the following will help.

Tax Cuts – A Simple Lesson In Economics

This is how the cookie crumbles. Please read it carefully.

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.

So, 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 each 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, 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 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 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 me!”

“That’s true!!” shouted the seventh man. “Why should he get $10 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 the tenth man 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 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 at the table anymore. There are lots of good restaurants in Europe and the Caribbean.

OK, violating the first rule of Seeing the Forest, I’m going to go through the trees.

“obviously you don’t know anything about business” He’s right. Oh, wait, I did run a corporation for over ten years, and was recently VP Marketing and Sales for a tech company. But he is right, except for that.

“Look at the historical tax rates and compare it to recessions and depressions here in the US.” Well, I have, and, obviously, he hasn’t, because he would discover that higher tax rates at the top coincides with periods of high GNP growth. Probably that is because we have a consumer economy, and more money in the hands of consumers means higher growth. And putting more of the tax burden on corporations and the rich means more money in the hands of average people. Remember, in 1993 Clinton RAISED taxes on the rich while cutting them on the low end. What followed was the greatest economic expansion in our history. And Bush CUT taxes on the rich while raising them on everyone else by cutting services, and what followed has been a long period of zero or slow job growth and massive concentration of wealth to the top few percent.

If I as a businessman have more money not taxable, DUH, I spend it on investments which hire more people who get paychecks and guess what idiot….. they then pay more taxes. Actually these businessMEN ship the money to bank accounts in the Cayman Islands, lay off their workers and hire in lawless countries where they only have to pay a dime a day. Smart businessWOMEN invest when there is DEMAND, and do so regardless of the taxes. And, even if they DON’T have a ton of cash they GO GET IT when there is demand. And, by the way, taxes are not a cost. Costs are deducted.

As for his “joke” I have a math degree, and clearly he doesn’t. But aside from that, his line “Tax them too much, attack them for being wealthy, and they

just may not show up at the table anymore” implies that the rich will just leave the country after taking what they can get from it. Now THAT’S a patriotic joke.

But let’s just sum it up in simple terms. In the 20’s we cut taxes on the rich and corproations, wealth became concentrated and we had the depression. Then we raised taxes on the rich and came out of the depression. Clinton raised taxes on the rich and we had the greatest economic and job expansion in our history. Bush cut taxes on the rich, no jobs and massive debt.

Update – I received the following after informing the writer that I had responded on the blog

:”I believe Cuba and China are still communist… you may want to move..”