Wally Dog
Well-known member
>Today's Economic Lesson in Taxation
>
>Let's put tax cuts in terms everyone can understand. Suppose that
>every
>day, ten men go out for dinner. The bill for all ten comes to $100.
>If
>they paid their bill the way we pay our taxes, it would go something
>like
>this:
>
>* The first four men (the poorest) would pay nothing.
>* The fifth would pay $1.
>* The sixth would pay $3.
>* The seventh $7.
>* The eighth $12.
>* The ninth $18.
>* The tenth man (the richest) would pay $59.
>
>So, that's what they decided to do. The ten men ate dinner in the
>restaurant
>every day and seemed quite happy with the arrangement, until one day,
>the
>owner threw them a curve.
>
>"Since you are all such good customers," he said, "I'm going to
reduce
>the
>cost of your daily meal by $20."
>
>So, now dinner for the ten only cost $80. The group still wanted to
pay
>their bill the way we pay our taxes.
>
>So, the first four men were unaffected. They would still eat for
>free. But
>what about the other six, the paying customers? How could they divvy
>up the
>$20 windfall so that everyone would get his 'fair share'?
>
>The six men realized that $20 divided by six is $3.33. But if they
>subtracted that from everybody's share, then the fifth man and the
>sixth man
>would each end up being 'PAID' to eat their meal.
>
>So, the restaurant owner suggested that it would be fair to reduce
each
>man's bill by roughly the same amount, and he proceeded to work out
the
>amounts each should pay.
>
>And so:
>
>* The fifth man, like the first four, now paid nothing (100%
savings).
>* The sixth now paid $2 instead of $3 (33% savings).
>* The seventh now paid $5 instead of $7 (28% savings).
>* The eighth now paid $9 instead of $12 (25% savings).
>* The ninth now paid $14 instead of $18 (22% savings).
>* The tenth now paid $49 instead of $59 (16% savings).
>
>Each of the six was better off than before. And the first four
>continued to
>eat for free. But once outside the restaurant, the men began to
compare
>their savings.
>"I only got a dollar out of the $20," declared the sixth man. He
>pointed to
>the tenth man "but he got $10!"
>
>"Yeah, that's right," exclaimed the fifth man. "I only saved a
dollar,
>too.
>It's unfair that he got ten times more than me!"
>
>"That's true!!" shouted the seventh man. "Why should he get $10 back
>when I
>got only $2? The wealthy get all the breaks!"
>
>"Wait a minute," yelled the first four men in unison. "We didn't get
>anything at all.. The system exploits the poor!"
>
>The nine men surrounded the tenth and beat him up.
>
>The next night the tenth man didn't show up for dinner, so the nine
>sat down
>and ate without him. But when it came time to pay the bill, they
>discovered
>something important. They didn't have enough money between
>all of them for even half of the bill!
>
>And that, boys and girls, journalists and college professors, is how
>our tax
>system works. The people who pay the highest taxes get the most
>benefit from
>a tax reduction. Tax them too much, attack them for being
>wealthy, and they just may not show up at the table anymore. There
are
>lots
>of good restaurants in Europe and the Caribbean.
>
>David R. Kamerschen, Ph.D.
>Distinguished Professor of Economics
>536 Brooks Hall
>University of Georgia
>
>
>Let's put tax cuts in terms everyone can understand. Suppose that
>every
>day, ten men go out for dinner. The bill for all ten comes to $100.
>If
>they paid their bill the way we pay our taxes, it would go something
>like
>this:
>
>* The first four men (the poorest) would pay nothing.
>* The fifth would pay $1.
>* The sixth would pay $3.
>* The seventh $7.
>* The eighth $12.
>* The ninth $18.
>* The tenth man (the richest) would pay $59.
>
>So, that's what they decided to do. The ten men ate dinner in the
>restaurant
>every day and seemed quite happy with the arrangement, until one day,
>the
>owner threw them a curve.
>
>"Since you are all such good customers," he said, "I'm going to
reduce
>the
>cost of your daily meal by $20."
>
>So, now dinner for the ten only cost $80. The group still wanted to
pay
>their bill the way we pay our taxes.
>
>So, the first four men were unaffected. They would still eat for
>free. But
>what about the other six, the paying customers? How could they divvy
>up the
>$20 windfall so that everyone would get his 'fair share'?
>
>The six men realized that $20 divided by six is $3.33. But if they
>subtracted that from everybody's share, then the fifth man and the
>sixth man
>would each end up being 'PAID' to eat their meal.
>
>So, the restaurant owner suggested that it would be fair to reduce
each
>man's bill by roughly the same amount, and he proceeded to work out
the
>amounts each should pay.
>
>And so:
>
>* The fifth man, like the first four, now paid nothing (100%
savings).
>* The sixth now paid $2 instead of $3 (33% savings).
>* The seventh now paid $5 instead of $7 (28% savings).
>* The eighth now paid $9 instead of $12 (25% savings).
>* The ninth now paid $14 instead of $18 (22% savings).
>* The tenth now paid $49 instead of $59 (16% savings).
>
>Each of the six was better off than before. And the first four
>continued to
>eat for free. But once outside the restaurant, the men began to
compare
>their savings.
>"I only got a dollar out of the $20," declared the sixth man. He
>pointed to
>the tenth man "but he got $10!"
>
>"Yeah, that's right," exclaimed the fifth man. "I only saved a
dollar,
>too.
>It's unfair that he got ten times more than me!"
>
>"That's true!!" shouted the seventh man. "Why should he get $10 back
>when I
>got only $2? The wealthy get all the breaks!"
>
>"Wait a minute," yelled the first four men in unison. "We didn't get
>anything at all.. The system exploits the poor!"
>
>The nine men surrounded the tenth and beat him up.
>
>The next night the tenth man didn't show up for dinner, so the nine
>sat down
>and ate without him. But when it came time to pay the bill, they
>discovered
>something important. They didn't have enough money between
>all of them for even half of the bill!
>
>And that, boys and girls, journalists and college professors, is how
>our tax
>system works. The people who pay the highest taxes get the most
>benefit from
>a tax reduction. Tax them too much, attack them for being
>wealthy, and they just may not show up at the table anymore. There
are
>lots
>of good restaurants in Europe and the Caribbean.
>
>David R. Kamerschen, Ph.D.
>Distinguished Professor of Economics
>536 Brooks Hall
>University of Georgia
>
