I was accosted by a Jewish hobo today...

[Philippus Flavius Homovallumus]

I deeply disagree with that.

Jokes serve a myriad of purposes, among them is showing acceptance.

Only in social groups (like teenage boys) where jokes and put-downs are used as a means of stratifying the group.

A lot of the point of offensive jokes is to be offensive, the clue is in the name. People say them for the shock value, and if you get all Rhyf over them, then you are the victim of the joke, not whatever group is being mocked. I used to work with a guy who told a lot of dead baby/paedophile jokes just to get a reaction. I ignored them and he stopped using them in my presence, pretty soon my co-workers realised that was the best way to stop him coming out with them.

Well, that's one way, another way is to look right at them and tell them that's not clever or funny with as much venom as you can muster - at which point you'll usually get a tirade about how you "can't take a joke". Then you just say, "well you can't tell one."