# How Taxes Work...

THis is a very simply way to understand the tax laws.... Read on - it does make you think!

Let's up tax cuts in terms everyone can understand. Suppose every day, ten men go out to 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, and the tenth man, the richest would pay \$59.

Thats what they decided to do. The ten men ate dinner in the resteraunt every day and seemed quite happy with the arrangement, until one day the owner threw them a curve or in tax language a tax cut.

"Since your ll such good customers," he said , " I'm going to reduce the cost of your daily meal by \$20." So now dinner for ten only costs \$80.

The group still wanted to pay their bill the way we pay our taxes. Soi the first four men were still unaffected. They would still eat for free. But what abou the other six men, the paying customers? How would they divy up a \$20 reduced bill so everyone got there "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 sixth man would end up being PAID to eat there meal. So the restaurant owner suggested that it would be fair to reduce each mans bill by roughly the same amount, and he proceeded to work ou the amounts each man should pay.

An 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 than before. And the first four continued to eat for free.

But once outside the restaurantthe men began to compare their savings. "I only got a dollar out of the \$20," declared the sixth man, "But he got \$7!"

"Yeah I only got one dollar too" said the fifth man, "It's unfair he got seven times what I got!"

"Thats true!" said the seventh man, " Why should he get \$7 back when I only got \$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 an beat him up. The next night he didn't show for dinner, so 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.

That 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!

During the slow mortgage season, my office is doing tax returns, with great referral programs.  \$10 dollars for each return brought in to the office!

Call Anthony Frustaci for details at 704 779 7911

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Anthony Frustaci

1st Mortgage Corporation

Office Phone: (704) 944-0444

Cell Phone: (704) 779-7911

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