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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.

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

  1. If they wanted to be accurate to the USA, it would come out to more like $500 for Tom, $5,000 for Dick and $14,500 for Harry and they would just borrow $10,000. Then they would borrow another $10 million to arm themselves with guns, hand grenades, dynamite, armored cars, 200 armed guards,drones patrolling, shoulder launched missiles and a whole lot of other items. I doubt Harry would want to leave the safety of that neighborhood after that.

  2. You fools why even work and getting tired when you can shit on your couch being a lazy leftist scamming social security and such, let the fools pay the bill myself, for my gay partner identifying as crippled to be able to scam off the state for money, for my trans dog and 4 adopted kids that i have taken in to get money from the state to raise them and leave them to sleep in the dog's house, all four of them…

  3. Unfortunately, this story does not depict America. The poorest brother had an income 1/6th that of the richest brother, and the Gini coefficient of their incomes was 0.33. This is much lower than the Gini coefficient of 0.48 that the USA has. I think the difference is that the US does not have equal opportunity.

  4. So what you're saying is that we should have an economy of only wage workers and they make exactly equal wages?
    Sounds like socialism to me.

  5. I like how they represent the "rich guy" as someone who makes 150k a year with his spouse working and he works 60 hours a week.

    They dont show the millionaire trust fund baby travelling the world on his yacht, stopping to check his portfolio on his phone, laying off 1000 employees so he can buy that nice French villa he's had his eye on for a few months.

    Oh those greedy working class scumbags taking all his money in taxes.

  6. You can’t take a scenario with three fictional people and relate it to a country with 325 million people you disingenuous wanks

  7. The problem is in the real world, the benefits wouldn't be equal, and they wouldn't live in the same neighborhood. Most of the tax dollars whether under democrat or republican governance go to the good or wealthier neighborhoods or to the officials who run the bad neighborhoods.

  8. And Harry eventually got his family the f**k out of California…er… their hometown and relocated to Texas, where they lived like kings on their investments. Tom and Dick were overrun by Hispanics, who not only didn't want to pay for anything, but wanted to take existing resources from Tom and Dick. Tom and Dick couldn't understand how any reasonable person would think this was even remotely fair, but the Democrats…er… Hispanics… insisted on it.
    Tom and Dick were overrun with feces in the streets and crime in their neighborhoods, and soon left their homes and followed their older brother to financial freedom.

  9. I have a problem with this I am going to tell you how taxing the rich actually works and why we should do it by telling you the reality of income inequality by changing the story to the truth alrighty I'm going to start 3 2 1 go Tom was born in a very poor family in a bad neighborhood in America when he got older he was forced to sell papers and had to Dropout of high school in order to help his family live and when he was a adult he could not go to college because it was too expensive instead he became a cashier and a McDonald's worker eventually he got cancer and it bankrupted him and he was barely living on one meal a day and living on the streets and homeless shelters next up dick was born in a middle-class family where he was able 2 go to a decent School and get a college degree but during college he was really stressed because he had to get a part-time job but he was able to be middle class next up Harry was born into a very wealthy family that had a net worth of 200 million dollars Harry went to expensive private schools and went into a prestigious University and when he was at the University he was partying hard and after college he became a wealthy businessman making 50 million dollars a year the end so do you think Harry should be taxed the same rate as Tom or should we tax Harry more so Tom can get Healthcare or not conservatives the reality is poor people are poor because they do not have equal opportunities to Rich Folk if we tax the rich we can use the tax dollars for something like Universal Health Care and Universal college education food assistance programs and other things that help poor Americans does Harry really need to have 50 million dollars a year because the more money that you have the lower percentage you need to survive I mean I'm I mean I'm only 12 and I understand this now when I say we should tax the rich for things like universal healthcare and Universal College education I am not advocating for socialism I am advocating so poor Americans can have equal opportunities that's all I would like to say

  10. Spot on. Funny how lazy stupid people think it's "unfair" when hardworking intelligent people who believe in DELAYED GRATIFICATION and LIVE WITHIN THEIR MEANS achieve success.

  11. The first proposal was the best. 10,000 per brother, not his fault the others didn't work the longer hours and save up for their retirement.

  12. This totally makes sense and is the most fair way to run things. But it's hard to apply to real life. This is because if each of the brothers only offered up 10k each, well the works wouldn't be able to be done because the poorest dude has literally no money to give, thus the necessary funds aren't generated and the street isn't reworked. It's unfair as hell but the government wouldn't be able to perform its duty if the poorest were expected to pay the proper fair amount and the rich paid the same, because the poor wouldn't be able to do it, and if they did many would face financial hardship that can have significant ramifications for the economy. That is the compromise that rich people are forced to make and it's not great but it's better than the alternative. I think, I'm not very knowledgeable about financial stuff.

  13. Not all taxes are income taxes many are regressive taxes for example green taxes on energy, they all use the same energy as they have similar house so pay £1000 each, however the poorest one is paying a bigger share of his income he is paying about 10 times are much towards "saving the plant". many other taxes are similarly regressive, more so in the UK perhaps, but also in the USA. Not this propaganda only talks about income tax, it cleverly avoids all the other taxes which are regressive when the lowest earner pay the most of his income on.
    Note so call AOC green new deal will be all regressive taxes that hit the poorest hardest, some socialist eh? More like an idiot.

  14. This is mail a fake situation, eg Trump plays golf all day, his low paid workers are working 80 hours and their wife whilst Melinia goee shopping, if Trump gambles and loses he gets a tax break, if you gamble and lose well you get nothing.

  15. And then you get the part where Harry gets out of paying for any of it, all thanks to loopholes that both sides ignore.

  16. The thing is, rich people don't work long hours. They work the same hours as everyone else sometimes even less, the only difference is they own a big company so they get paid more in a second than their employees do in an hour

  17. The richest of the brothers could have offered to move to another neighborhood and to sell his house at a lower cost matching what he would have had to pay covering the cost of his two brothers shares to a gang of drug related Mexicans. I am sure the middle one of the brothers would move along with the righteous and fair brother and that the cheap brother would enjoy his new neighborhood.

  18. LOLOL… this is how capitalistic bakers and new age credit slave owners criticize normal people.

  19. So an astounding amount of people believe that this video clearly proves that the progressive income tax makes no sense. Just to clear the air, the video is actually quite deceptive because it is not an accurate representation of how our current country works. We are not all born in the same house, raised the same way and given the same opportunities. We also do not all work the same jobs with the same hourly salary. The deceptive part of this comes in because this video sets in your mind that the only reason people are poor is because they don't work as hard. Yet I know most of you can name someone who makes wayyy more money than you but definitely doesn't work as long or as hard as you. The progressive tax is meant to mitigate the fact that more money = more opportunities while addressing the fact that we all don't enter the world on the same starting line. This doesn't even take into consideration that some people with inherited money either don't work, or work less with the most of their money coming from investments which are not taxed the same way. If you still think this video makes sense, apply the same gate building question to the children of Tom, Dick and Harry. Do you think they will all get the same opportunities in life? How will these differences affect their futures, and should they be held responsible for choices made for them by their parents?

  20. Well since the income tax was intended for corporate profit and there was no law passed that we the people are to pay income taxes it seem pretty foolish that you all are paying.

  21. I assume they’re working as self employed as they get to decide what hours they work? I’m not familiar with the US taxation system but assume tax works differently for individuals, self employed and business so this video could be taken out of context or accurately reflect what the circumstances they are trying to portray. There are also several other assumptions made, if they are working for themselves they would likely draw a salary rather than an hourly wage, if they’re working for somebody else Tom is lucky not to get the sack with his attitude towards how many hours he works and Harry is lucky that his employer is willing to pay overtime/ more than the average hours per week, not all employers (especially small businesses) are unwilling to pay excess wages as it come directly from their bottom line. If they are self employed then hours worked becomes somewhat irrelevant as hours worked do not necessarily reflect; efficiency, quality of work, business skills etc etc. As a side note from experience a salary these days doesn’t necessarily reflect hours worked etc and very often those in a career job on a salary would be earning less than minimum wage if they were paid hourly. In reality Tom could work 20 hrs but have identified a niche market which makes him a significant amount, therefore he could be considered the one with a higher IQ

    I’m not trying to make one specific point but my point is that everyone’s situation is different and one shoe does not fit all

  22. While I think socialism is stupid, this video doesn’t quite respond well, because the motive of socialism is the help the least fortunate, while this is a possibility and there are people that cheat the system, this situation where everyone has the same background and they CHOOSE to work less or wtv doesn’t respond to why socialism exists, I think there is a much better way to disprove the reality of socialism, because at the end of the day socialism wants to help the least fortunate and makes the argument that the rich have a moral obligation to help those who really need the money, and the real situation is those who need money try super hard and have the most hours worked, they just simply weren’t given the opportunities growing up and socialism tries to combat the randomness of who has the struggle since day 1. Now socialism isn’t the best way to combat that, I think capitalism solves it better, but this video is narrowed down onto a cherry picked example that rarely happens

  23. Harry's effective tax rate is only 18 percent and he will get to deduct all the costs to run his carpentry business and his property taxes and his mortgage interest. So you can all stop crying now. Learn how taxes work PragerU and stop putting out false information that nobody bothers to fact check.

  24. The sad thing is that pay scale is not based on how many hours you work. Many people work 2 or more jobs at minimum wage. So this scenario is not a fare judgement.
    The lower tax bracket guy is not living in gated community.
    A flat tax would make this fare for everyone. No more write offs, except medical.
    The last brother was a fool and should have got the money up front.

  25. Dude that is not what's happening the problem is with their sons and daughters they had equal aprotunity but their offspring won't when u want to guarantee a basic human rights for all u cant take equal taxes though I think that taxes should consider if the money is earned or inherited

  26. Lol this is so disingenuous and moronic

    All three people in the example make the exact same wage? And none of them inherited any of their parents' wealth. What a great example of progressive taxation in action

    The fact that the whole video sounds like a children's book helps too

  27. Well all things being equal and they never are you have to compare apples with apples, oranges with oranges, placing a higher tax rate on earn income, a lower rate on capital gains and dividends which is the pea and shell game Income is income but fairness has never been the point.

    Now add depreciation's giveaways with the song and dance that it promotes investments now you have three card molly game going on but as an investor, I benefit from this bull%&$# I just don't lie to myself calling it fairness when its all bull$#@#

  28. The math is incorrect.
    Their income should be:
    25k for Tom
    75k for Dick and his wife
    125k for Harry and his wife
    Total = 225k

    According to the ludicrous IRS tax tables they would pay:
    21,000 by Harry
    8,100 by Dick
    900 by Bum, I mean Tom.
    Total = 30k

  29. Well then, I tried for years to make my dad change his view about progressive income tax, all to no avail. Until I made him watch this clip. Just a few minutes. And he began doubting his blind belief in this socialist garbage. I feel empty now. But hey! That's what means to produce quality contents! XD Thanks Prager U!

  30. This is why my family don't live next to the other siblings. Because everytime we have more, they started to ask for something that we earned. And this story really get into me because my family experience this kind of bs.

  31. After payment, the construction company decided to give them a 10% tax cut, er I mean 10% discount. Harry got 2350 back, Dick got 650 back and Tom got nothing back. Tom screams that the 10% discount only benefited the rich.

  32. It’s actually not The End.

    Harry, who could afford to move off the street, did just that. Tom & Dick, left to pay for all future upkeep and improvements to their street, lived with cracked asphalt and dead flowers behind rusty gates.

  33. More realistic version!
    Tom was black and grew in a ghetto , his dad died early cause he couldn't afford healthcare , his mother was sick but still worked 8h a day but still she couldn't afford education for Tom. That's why Tom had to work for a minimum wage job 8h a day for a total of about than 10k a year. His wife at a part time job because she had 5 to take care of and got 4k a year. 10+4= 14k$ a year. Dick grew up in a middle class family , got educated , went to college and got a job 7h/day offering 25k and his wife worked at a part time job for 15k and had to take care of 3 children. Harry grew up in a wealthy family owning a big tech company and went to a the best private school of the country and then went to Yale. He inherited the company at his 20s getting paid 3M a year and working 4 hours a day. His wife didn't work and he he had just one son.

    Life is so fair in Capitalism.

  34. This story is lacking Jeff, that makes $150,000,000 a year, but also pays ~$23k in taxes because of expensive accounting and lobbying that easily pay for themselves in tax savings. Any effort to collect more from Jeff actually results in collecting more from Harry.

  35. Income tax is the most evil tax since 1913.

    Sales tax and property tax are far far less evil.

    Milton Friedman, who generally didn't like taxes at all, called the land-value tax "the least bad tax."

  36. That's some sleight of hand card trick. Imagine three brothers who are not equal. The first earns 10.000 the second 50.000 and the third 100.000 per year. If the income tax would be a flat 5.000 to everyone, the first brother would give away 50% of his earnings; the second 10% and the third 5% — when ever the two first borthers complained about that, the richest brother said, you're just lazy bums who haven't utilized all your oportunities. Perspective and framework are everything tbh 😉 Also taxes and sharing community costs are two separate things what shouldn't be dealt with same way, cause there are times when you have to pay progressively and then there are times there you should pay equal shares. In the case of the video 10.000 each would have been fair while if we're talking about children and parents agreeing on paying for something, it is obvious, the parents have the greater share — still if people would insist on the richer having to give more because they earn more, they should also get more for it — like hte right of parenting or patronising, making all who earn less childlike in their rights… And I still liked the video, gave some interesting thoughts… keep it up (Y)

  37. Why should I pay more, just because I'm the one that that will gain most from security???
    I want my poor brothers to subsidize my needs. Buh huh!!!

  38. "they were raised in the same home, with the same parents, had the same IQ, same skills, same opportunities"
    well, it ends here, right at the start. Society is full of unequal situtations.
    By the way, poor Harry is a fool 😀

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