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Millions and billions June 27, 2007

Posted by Jeff in Economics.
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J. Paul Getty once said, “If you can count your millions, you are not a billionaire.”  I’m trying to remember that, because I don’t want to think – mistakenly – that I have become a billionaire.

Too many people don’t know the difference between millions and billions, but it’s important even if you’re not a math whiz and even if you’re not quite up to the net worth of J. Paul Getty.

Consider this example. Let’s say that tomorrow congress passes two bills, one that will cost taxpayers 300 billion dollars and one that will cost 300 million dollars. If you are a taxpayer, you really should know what this means. Do you know the difference between the bill that will cost 300 billion dollars and the one that will “only” cost 300 million dollars? When you hear a sound bite about it on the evening news, it is easy not to register the difference.

Now let’s say that instead of congress debating the bill in Washington, your own senator visits you personally and asks you to fund your portion of that bill. Since there are around 300 million people in the US, for the 300 million dollar legislation, he or she might say, “Your portion will be one dollar.” (We’ll say it’s a flat tax.) However, for the 300 billion dollar legislation, he or she would say “Your portion will be one thousand dollars.”

That’s a big difference, and if you’re someone who thinks a thousand dollars is a lot of money, consider this the next time someone says they’d like to spend it on something. Remember, you’re not a millionaire if you can count your thousands.

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