Sometimes politicians, journalists and others exclaim; "It's just
a tax cut for the rich!" and it is just accepted to be fact.
But what does that really mean?
Just in case you are not completely clear on this issue, I hope
the following will help. Please read it carefully.
Let's put tax cuts in terms everyone can understand.
Suppose that every day, ten men go out for dinner and 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 would pay $7.
The eighth would pay $12.
The ninth would pay $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."
Dinner for the ten now cost just $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 men - the paying customers?
How could they divide the $20 windfall so that everyone would get
his 'fair share?' They 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 two? 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 anymore.
In fact, they might start eating overseas where the atmosphere is
somewhat friendlier.
**************
According to Snopes.com
a version of the above Humorous essay on "how taxes work," started going around the Internet in 2002, and has been attributed incorrectly to several people including Thomas Davies, Professor of Accounting; Dr. David R. Kamerschen, Professor of Economics; William F. Buckley Jr., and Don Dodson.
Although the Author is Unknown, we can surmise that the person must have been "right minded."
We know definitely that it could not have been Democrat!
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