Following the daily newspapers, there seems to be much emphasis placed on Percent (%) and "Median", so I thought that it might be interesting if we "explore" each of these items...
First off let's make sure we are on the same page as to the meaning of these two items.
"Percent": This is a pretty easy one. Simply stated it is a fraction of 100. Example, I get a $0.15 raise to my $2.50 per hour rate. Thus 15/2.50=0.06 expressed as a percentage is a 6% increase.
"Median": I think this one is a bit more difficult to comprehend. Keeping it simple Median is a Value that is HALFWAY of the "whatever it is". One half is greater and the other half is lesser". Such as if you arrange all the "whatever's" from smallest to largest, the "Median" is exactly halfway. Sometimes this is confused with "average" so let's take a closer look.
Let's use income for 5 people as an example...
Person #1 = $30,000
Person #2 = $40,000
Person #3 (Me... Mr. Median) = $50,000
Person #4 = $60,000
Person #5 (Mr. Wealthy) = $2,000,000
Now, the "Median" income would be $50,000 (person #3 -Me- is HALFWAY) whereas the "average" income would be $436,000. Quite a difference... Right? And very misleading. Looking at average, it makes it look like all 5 are rich, whereas person #5 (Mr. Wealthy) is the only "rich" one here. In this case median gives a better picture of what all 5 really have, but in some way hides the wealth of Mr. Wealthy.
Anyway, you can see there is a big difference between "Median" and "Average", so you really need to pay attention when reading newspaper data, as to what they are talking about.
OK... Now that we have that understood, let's move on.
Mostly we will be discussing money (ugh...).
Now, we all know that we don't take "Percent" to the Bank. For some reason (another topic) they only accept (in most cases) MONEY.
So, I go to the Bank and deposit $1,000 into my $10,000 savings account (this is the one I have been putting money in for the last 58 years). So you can see that I put in 10%, (1000/10000=.1*100=10) and now have $11,000 right. So now I want to take that $1,000 back out. Hey... what happened here $1,000/$11,000 is only 9.09%. Did I get cheated? Looks that way.... right? But another way to look at it is like this. Say instead that I want to take out 10%... Same percent I put in. (10% of 11,000=$1,100). Then I would get back $1,100 or $100 more than I put in. Hey... I like that scenario better, so maybe I start dealing with the bank on a % basis. Oops... did I make a mistake here? If I take out $1,100 (10%) then I only have $9,900 left. Darn... thought I was pulling a fast one on them.
So... Can see where percent can be confusing? So as you read through the newspapers these days, pay attention as to how Percentage is used and applied. Particularly when it comes to "BIG" (As in Big Government).
Now, here is an interesting example. In today's paper there is a story about the Bush TAX cuts, and what Congress (once they wake up from their nap) needs to decide on (or not) before the end of the year.
Now, you will just have to trust the data (from the newspaper), just as much as I trust the Newspaper - they are never wrong, right?
Regarding the tax cuts of 2001 & 2003... "Income tax rates were reduced to a bottom rate of 10 Percent and the top marginal rate of 35 percent. If the cuts expire, the bottom rate would increase to 15 percent and the top rate would rise to 39.6 percent (... and several rates in between would increase as well)".
Scenario: Congress does nothing. So "Mr. Median" (ME) at the bottom rate pay 5% more TAX (15-10=5). My good buddy "Mr. Wealthy" pays only 4.6% more TAX (39.6-35=4.6). Hey, why did Mr. Wealthy get a brake and not me too? The 0.4% (5-4.6=.4) may not sound like a lot but remember we are dealing with the elusive PERCENTAGES again. Let's suppose my good buddy Mr. Wealthy earns (RIGHT!!!) $2,000,000 a year (while playing golf while I slave). So do the math... $2,000,000*0.4% is $8,000. Hey, this is not chicken feed, at least for me, but to Mr. Wealthy... $2,000,000-$8,000=$1,992,000. Awwww, don't you just feel really sorry for Mr. Wealthy?
Now let's have some fun... you may get riled up - or cheered up depending on who you are. Let's look at percents again. It really gets interesting when you start dealing in Percents of Percents.
Remember that my (Mr. Median) rate goes from 10% to 15%. According to my math 15-10=5 & 5 is 50% of 10, so what I really got was a 50% increase. Mr. Wealthy, on the other hand... went from 35% to 39.6% percent. Same math... 39.6-35=4.6 & 4.6 is only 13% of 35. Boy am I getting screwed... I get a 50% increase whereas Mr. Wealthy only gets a 13% increase. Not fair! Right? So at the very least (again if congress does nothing but nap), then it would only be fair that Mr. Wealthy get the same 50% increase... same as me. So instead of going to 39.6%, Mr. Wealthy's rate would go to 52.5%. Do the math 52.5-35=17.5 & 17.5 is 50% of 35.
So the "old" way I pay 10% of my income. 10% of $50,000 = $5,000, and Mr. Wealthy pays 35% of $2,000,000 = $700,000.
The new way I pay 15% of my income, 15% of $50,000 = $7,500, and Mr. Wealthy pays 52.5% of $2,000,000 = $1,050,000.
Seems fair to me... what about you?
Just Say'n
Congress needs a Monster drink...wake up!!!
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