Suppose that every day, ten men go out
for beer and the bill for all ten comes to $100 and 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 drank in the bar 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 beer by
$20." So drinks 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 drink 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 drink his beer.
So, the bar 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 pay $5 instead of $7 (28%savings). The
eighth now paid $9 instead of $12 (25% savings). The ninth now paid
$15 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 drink 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 I!"
"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 drinks, so the nine sat down and had beers 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, ladies and gentlemen,
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 drinking
overseas where the atmosphere is somewhat friendlier.
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