# Tax Cuts, ah... so desu ne

I always wondered about tax cuts and what W was up to. This makes sense to me, so I am not so negative about them anymore[quote]Taxes and Tax Cuts –

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 (Americans) 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 and 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 (in tax language, a tax cut).

“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 \$80.00.

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, “but he,” pointing to the tenth, “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, a little late, what was very important. They were FIFTY-TWO DOLLARS short of paying the bill.

Imagine that!

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. Where would that leave the rest? Unfortunately, most taxing authorities cannot seem to grasp this rather straightforward logic.

Tom L. Davies
Division of Accounting and Business Law
The University of South Dakota [/quote]

Why do you think places like the Virgin Islands, Bahamas and all those other offshore tax havens exist? The above story is well illustrated by the exodus of Britain’s wealthy in pre-Thatcher labour Britain.

I’m thinking of starting an offshore company to do that ‘salary replacement’ thing that’s been written up recently. Which of these ‘tax domiciles’ is best? Best would mean most convenient if one is planning to stay in Taiwan

Can anyone recommend to me a good tax accountant or lawyer – my Mandarin is very poor, so someone who speaks English pretty well is important.

The rich don’t pay taxes because they can afford to pay clever people to work out clever ways of avoiding it. So don’t be disillusioned.
Corporations do, however like microsoft but the taxes they pay are passed on to the customers anyway- so in effect they pay the rich corporations’ taxes.
Work out who wins?
This is why the rich stay rich.

Only applies to US but www.fairtax.org offers a good solution.

No tax below the poverty level.

No corporate tax.

No loopholes.

No need for professional tax preparers.

No tax for people living outside the US.

No tax on savings.

No IRS.

Fully funded government (including Social Security)