The Progressive Income Tax: A Tale of Three Brothers

The Progressive Income Tax: A Tale of Three Brothers

Once upon a time, there were three brothers,
triplets, named Tom, Dick, and Harry Class. They were raised in the same home, with the
same parents, had the same IQ, same skills and same opportunities. Each was married and had two children. They were all carpenters making $25 per hour. While they were very similar in all these
respects, they had different priorities. For example, Tom, chose to work 20 hours per
week, while his brother, Dick worked 40 hours and Harry 60. It should also be noted that Harry’s wife worked full time as an office manager for a salary of $50,000. Dick’s wife sold real estate part time 10 hours a week and made $25,000 per year. Tom’s wife did not work. Tom and Dick spent all of their family income.
Since they paid into Social Security they figured, they didn’t need to save for retirement.
Harry and his wife, on the other hand, had, over many years, put away money each month
and invested it in stocks and bonds. Here’s how it worked out: Tom made $25,000
a year, Dick and his wife made $75,000 and Harry and his wife, $150,000. When a new housing development opened up in
their community, the brothers decided to buy equally-priced homes on the same private street. One day the brothers decided to pool their
funds for the purpose of improving their street. Concerned about crime and safety, and wanting
a more attractive setting for their homes, the three families decided to install a security
gate at the street’s entrance; repave the street’s surface; and enhance the lighting and landscaping. The work was done for a total cost of $30,000. Harry assumed they would divide the bill three
ways, each brother paying $10,000. But Tom and Dick objected. “Why should we pay the
same as you?” they said. “You make much more money than we do.” Harry was puzzled. “What
does that have to do with anything?” he asked. “My family makes more money because my wife
and I work long hours, and because we have saved some of the money we’ve earned to make additional money from investments. Why should we be penalized for that?” “Harry, you can work and save all you like”
Tom countered. “But my wife and I want to enjoy ourselves now, not 25 years from now.” “Fine, Tom. Do what you want. It’s a free
country. But why should I have to pay for that? “I can’t believe your being so… unbrotherly,”
Tom argued. “You have a lot of money and I don’t. I thought you’d be more generous.” At this point, Dick, the peacemaker in the
family, entered the conversation. “I’ve got an idea,” Dick said. “Our combined income
is $250,000, and $30,000 is 12 percent of that amount. Why don’t we each pay that percentage of our income? Under that formula, Tom would pay $3,000, I would pay $9,000, and Harry
would pay $18,000.” “I have a much better idea,” said Tom. “And
one that’s fairer than what you’re proposing.” Dick and Harry turned to Tom. “Harry should pay $23,450; Dick, you should
pay $6,550; and I will pay nothing.” To Dick this sounded completely arbitrary,
and not really fair. But it did have one big plus. His share would be $2,450 less under
Tom’s formula than under his own. So, he decided to be silent. Harry, however, was stunned. “You want me to pay almost 80% of the bill despite the fact that each of us is receiving the exact same benefits? Where did you get such a crazy idea?” “From no less an authority than the U.S. government,”
Tom responded, as he pulled out a gray booklet. “It’s all right here in the IRS tax tables.
This is the progressive income tax system all U.S. taxpayers live under, and I don’t
see we should be any different. In fact, I believe all future improvements should be
paid in this way.” “Works for me,” said Dick. So, by a vote of
two to one, the cost of the street improvements was divided as Tom had proposed, even though
they benefited equally, and even though the reason Harry had more money was that he and
his wife had worked many more hours than his brothers and their wives, and saved some of
what they had earned instead of spending it all. Tom and Dick lived happily ever after with
their new arrangement. Harry grumbled a lot, but whenever he complained his brothers called
him greedy and selfish. The end.

Author: Kennedi Daugherty

100 thoughts on “The Progressive Income Tax: A Tale of Three Brothers

  1. A big issue with this video is that it assumes equal opportunity for all. On a whole PragerU needs to get people who actually understand economics to analyse the issues that go beyond unequal opportunities. Highly misleading video.

  2. I would have went further to say that Harry decided to move out of the county with his wealth making Tom and Dick have to pick up his share of taxes. Wealthy people can live anywhere in the world, and will. Don't think they will stand for paying 80%!! I've for a flat tax on everyone equally.

  3. This is an intellectually dishonest video that over simplifies the macrocosm of our government's expenditures to provide for public services down into a trivial brotherly IOU. If government was structured like what this video claims to be ideal, then the underprivileged wouldn't just pay the same percentage as the rich, they would be forced to pay the same AMOUNT. Which is complete absurdity if you ask me. Remember, the brothers paid 30 grand after they pooled their money so each of them has to pay 10 grand each because that's how it works in an "ideal system". But if we apply that same logic to taxes, why would someone who is earning $50k have to be taxed the same amount as someone who has $100 million?

  4. Harry should emigrate. Norway is one of the happiest countries in the world! A country that happy, probably dont ask taxes at all! Oh wait..

  5. BS, The local government would have screwed them over for buying those properties and developing them, so in reality this never happened.

  6. What's really funny is that the ones pushing this "Progressive Tax" are some of the richest people in America. I have yet to see a single one of them declare that they will give up their income under this new tax. I mean Barack Obama now owns what, 4 mansions and Sanders 3? I don't see them giving them up to house the poor people they supposedly represent.

  7. Lose the advertisemt , Prager…. it's content is most unbecoming to your otherwise intelligent and appreciated YouTube presentations!!

  8. New Hampshire is income tax free. What lucky people up there in that fine state. Also all fireworks are legal up there. Compared to Vermont, New Hampshire is vastly superior.

  9. The Flat Tax is NOT a solution to the horrific evil empowered by the existence of ANY tax inspired by collectivist ideology — i.e., taxes based on income (regardless of rate or simplicity), property, estates, capital gains or "value-added". When America finally abandons ALL of these forms of taxation at all levels, then and ONLY then will she begin her FIRST truly spectacular era!

  10. Please explain to me how Dick's wife is making 25k a year with 10 hours of work per week. Not accounting for any holidays or days off, she's making $48 per hour. Someone point me towards her employer.

  11. This is an example of how PROGRESSIVE TAXES screw up a segment of the population who START at the same level playing field as others but decide to work HARDER (and/or sometimes SMARTER) and then GET SCREWED by the Thieves in Government who were voted in by the lazy, the jealous and the ignorant BUMS……

  12. Interesting. Yay socialism. This video really captures the greed and douchebaggery of the left and their ideas. Gotta love it.

  13. The percentages need to be tweaked so only the super-rich have to pay a significantly higher amount. Because they are the ones who got that rich by taking advantage of the lower and middle class.

  14. The notion that wealthy people work more than poor has to stop. The poorest brother is likely working 3 jobs 90 hours a week while the wealthy brother is "working" at golf tournaments at expensive hotels at least once a month at the real estate company which in turn becomes a tax write- off…

  15. Yes, nicely put. Unfortunately that kind of mentality abounds. People who have striven to get 'ahead' shouldn't be penalised for their efforts. It's simplistic thinking like this that causes Socialism to get traction.

  16. Herry is a idiot since he could get all the benefits since he paid 80% and make the hole street his property and brothers wouldn’t be able to say anything.

  17. Do you know how progressive income tax works? Because by the way you explained it, you don’t. Let’s say you make $50,000 a year. The government taxes you and every one else making $50,000 a year 10% of you total income. You pay them $5,000 that year.

    The next year, you get a raise of $10,000 dollars. You now get $60,000 a year. What you described is that now the government would take 12% of you income or $7,200, but in reality they would tax you would pay $6,200.

    Why? Because the government actually still taxes 10% of the $50,000 you make and 12% on the extra 10,000 you made.

  18. Eh just let the rich be, I hate when people hate on them. Some people have better opportunities than others that's life and nothing can be done about that. If you can make loop holes and benefits of off it fair play

  19. This is literally the worst example i have ever seen to push a political agenda. In that kind of situation the money would be divided into 3 or the money would be taken out of the money pool the society that is influenced by this. And progressive income tax is not for "taking away someones hard earned money", it is for making living much more affordable for everyone, for low earning people that almost cant financiate their lifes and for high earning people that can do that with enough money left to do that a fiew times. If you think that taxation is really bad for the country then look at the countrys that tax high, e.g. sweden. People that visit sweden are surprised of how relatively well everything works there. Same goes with other higher taxing countrys.

  20. I'm a business owner, and as such take on infinitely more risk and sacrifice of time and peace of mind than most employees to create jobs and opportunities not only for myself but my community. I deserve the reward those "ballsy" efforts yield.

    I will not be apologetic for this. That's the beauty of a free market. It's why we've grown to the greatest country in the world.

    I cannot stand when I see such ignorant socialism being practiced by people who believe that they're "Free Americans".

    Socialism is just the economic wing of communism and communism is merely the practice of fascist theory. Did we not learn from WW2 from Musaleni, Hitler, Stalin, etc???

    Just disgusting, ignorant, ungrateful, leftists.

    Such an exact display of taring up the foundations of our great country…

  21. Okay…. story makes sense FOR equal opportunity. BUT how does the real world look like? DO we all have the same CHANCE to go to a GOOD SCHOOL or COLLEGE….? (If College is something to consider). MONEY rules the world – the brothers were all from the same ROOTS but the ELITE plays by their OWN rules…. Very Often – people do not have the same Opportunities….. / something to think about. But I would also add, for most of us – the slaves – this parable may be appropriate.

  22. The real fairy tale here is that on 25,000 a year someone with two kids would ever in their lives be able to afford a house. Even in the deep south that's a completely nonsensical notion.

  23. The main problem with this video is that it claims everyone is born equal. We do not all have the same parents, iq, skills or same opportunities. Some people can't afford to go to university. People go into debt for health reasons etc. The differences of wealth is not just hours worked. We can't all afford private school so we don't all have equal opportunities. I agree though 70% tax is ridiculous to work 3 and a half days and only 1 and a half for yourself is a terrible idea.

  24. Anyone else think it's weird that the 1st brother just comes off as lazy and selfish? I mean only working 20 hours a week and just blatantly saying how he doesn't care. This video makes no sense and isn't realistic at all. In what world does everyone have access to equal education and opportunity.

  25. in the real world the poor brother would be renting his house from the rich brother who owned it. when the rich brother paid all the money to develop the street all that money would be paid back to him as capital gains on the properties he owned. The poor renting brother would get non of these gains, just the better street. It's fair because everyone gets the better street for free because the improvements paid for themselves via capital gains from the gentrification of the street.

  26. This video has a point, difference is not everyone in America has equal opportunities and upbringing. Even if Tom and Harry had the same skills, but Tom was born in poor family and got a shitty education, he would have to work a lot harder to earn the same amount as Harry. Personally I only partly agree with this video. Better solution could be a progressive VAT…

  27. Great example of Bernie Sanders Socialist bull. How did this country get to this way of thinking? Where did it start? The colleges are definitely one of the main organizers of this logic and are brainwashing our kids. The question also would be who are these teachers? Why are they doing this and how does it benefit them. I believe they dont make enough money so someone with the agenda of destroying this country is paying them to spread anarchy. I am not saying all teachers, but there are a lot of them doing this. Well the school faculty stops right wing seminars and promote left wing seminars. It used to be if students acted this way they would be kicked out. What happened? I am doing a lot of research and will get to the root of all of this. Once I gather enough damming info I will send my proof to the right people to get the word out. This shit has got to change. I urge everyone to do the same. I for one am not.gping to let my kid be brainwashed by these assholes.

  28. That is a fairy tale! In the real life, in Portugal, my grandparents didn't have the chance to study beyond the 4th grade because their parents could not afford to pay for school. So explain to me why a rich family that could afford to put their children in school should not pay more taxes!

  29. This a bit ridiculous here. Before building the project, they should agree on the financial backing, shouldn't they?

  30. I must say i dont think a progressive tax system belongs in the US, but it works good in Denmark, ofcourse their can be made chances:)

  31. مايصير اخوهم توم دخله المالي قليل ويشتري بيت مع اخوانه نفس سعر البيت وحتى الاخ الوسط ، وقانون فاشل يجبر انه يدفع هاري ضريبة أكثر من الباقي ومافيه عدل لكن من العدل أنه من يشتري بيت كبير او وسط او صغير يدفع عليه ضرائب حسب حجم بيته ، والضرائب عموما هي دمار للشعوب ولم تنزل في أي دين على وجه الأرض وهي من صنع الإنسان الجشع والاستغلالي وتسبب الفقر للشعوب ويجب إلغاء كل الضرائب في العالم حتى ينتشر العدل والمساواة بين كافة الشعوب

  32. this is one of the stupidest videos I have ever watched. Also, who buys a house on $25K a year? The whole thing is ridiculous.

  33. This is very naive. You can't compare a society with 3 brothers grown in the same house. 1. People are not given the same opportunities, they don't have the same health and IQs, they are not equally privileged, They are not equally lucky, and they don't have the same family wealth. They don't buy equally priced homes and they don't live in the same neighborhood. It's also naive to compare government services to a cosmetic touch-up to the house front.
    The real story is that the rich brother will buy all the land, running the prices high for the other two brothers. They can't afford to live, they can't afford to go to a doctor, etc. People don't treat each other like brothers! What a stupid analogy of taxes!!!

  34. I'm sorry, but in what world does everybody make the same hourly wage and the difference in income is a direct reflection of number of hours worked?

  35. The society does not work like in this video. Those who are rich are rich because there are people who work for them or do the low skill stuff. For every shop owner there is a worker who works for them. The worker probably works 40 hours and the owner 70-100. And the owner maybe gets 100 times more money. Although the state could not be financed well if there were no progressiv taxes. It means the normal people would get less things from the government or they would have to pay more in taxes to finance it.

  36. The fairest tax system would be based on sales taxes. You pay taxes on what you buy, I pay taxes on what I buy and EVERYBODY pays taxes. BUT!!!… the only way I would endorse a tax based plan would be with a constitutional amendment limiting the tax rate. That way another amendment would be required to raise the rate. That'll never happen, so…

  37. Your logic is flawed in regards to Tom's wife. You should say she didn't work outside the home. Homemakers, although not receiving remuneration
    contribute vastly to a household.

  38. That's not how progressive tax works though. When you move up a tax bracket, you for get taxed morefrom your whole income, just the part that's over the line.

  39. I've heard this one! One gets a cloak the other a wand and the third a stone! Yeah? No? Oh…wrong three brothers. I'll leave.

  40. "The scope of stealing is very limited to the poor person and abundant to the rich" – Hence progressive tax is correct, may not be fair
    I am a conservative yet support progressive taxes. ask anybody from India "How did the rich become rich, and becoming richer?"
    Maybe some had worked hard, but most of India's rich are from stealing, exploiting, illegal activities, smuggling, corruption, taking advantage of things.

  41. People also tend to forget the "Birth Advantage" , I was born into a family where my father died. So according to the system I should be poor or work my ass off

  42. It’s the other way round in America.
    Billionaires pay less tax than the lowest paid.
    Why don’t they use the example of trump, earns millions pays no income tax whatsoever.
    Bill gates or the clintons who use the “charity” as a way to avoid all income tax

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