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Wikipedia recognizes that: "The dominant role of the federal government in road finance has enabled it to pass laws in areas outside of the powers enumerated in the federal Constitution. By threatening to withhold highway funds, the federal government has been able to force state legislatures to pass a variety of laws”
Of course, some laws passed this way like seat belt and minimum drinking age laws are beneficial but many infringe upon states authority to set their own laws that might better apply locally. The federal mandate for a 55mph speed limit was bad law because it made perfectly law abiding citizens lawbreakers overnight. Many times when the dollars come back from the feds they come with mandates meant to help special interests. Federal mandates for highway fund usage often specify that a 'prevailing wage' (union wages) be paid thereby raising cost and eating up as much as 80 percent of the received federal funds. ( The Road to Privatization: Let States Take Charge of Highway Dollars [Mackinac Center] )
Further, Transportation Secretary Ray LaHood was recently making noises about how he would like to ban all cell phone use in cars, even 'hands free' units! Fed education funds could be denied, via the Solomon Amendment, to those Universities that deny ROTC access on their campus. The list goes on and on.
JM
While some of this might be seen as non sequitur re poverty issues, federal mandates re wages, benefits, hiring practices etc. certainly are not unrelated to the "War on Poverty."
I wonder how many people are poor due to federal dickering with wages, benefits, hiring practices alone? Certainly environmental regulations, fees, restrictions, OSHA mandates, etc. all play a part in all that. And of course you can never ignore tax structures in the equation.
The variation of a humorous essay (following) has been cited by economics professors, financial columnists, and others at regular intervals since at least 1991. It has been attributed to several different distinguished personalities to the point Snopes finally looked into it and inquired of the people cited as authors. So far all have denied writing the piece though several have used it in the classroom or in the newspaper or whatever.
As yet nobody has presumed to try to discredit the thesis of it.
Here's the version, pretty close to being revised to reflect the current tax code, that I ran across this week:
THE TAX SYSTEM EXPLAINED AT THE BAR
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 ball. "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 men would 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? 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 every body'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 higher percentage the poorer he was, to follow the principle of the tax system they had been using, and he proceeded to work out the amounts he suggested that each should now pay.
And so the fifth man, like the first four, now paid nothing (100% saving). The sixth now paid $2 instead of $3 (33% saving). The seventh now paid $5 instead of $7 (28% saving). The eighth now paid $9 instead of $12 (25% saving). The ninth now paid $14 instead of $18 (22% saving). The tenth now paid $49 instead of $59 (16% saving).
Each of the six was better off than before. And the first four continued to drink for free. But, once outside the bar, the men began to compare their savings.
"I only got a dollar out of the $20 saving," 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 benefit 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. This new tax 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 their 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 government ministers, is how our tax system works. The people who already pay the highest taxes will naturally 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.
The poorer beer drinkers wind up being worse off. Or of course they could run a tab until the bar runs out of money and can't resupply for anybody. And then.....no more beer.
For those who understand, no explanation is needed. For those who do not understand, no explanation is possible.
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