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An interesting interpretation of the tax system in action.
Subject: A preponderance of thought.........................
about an honest story with a new presentation
About 2 minutes worth of reading but perhaps something to share with
your
friends and family.................................
I was having lunch with one of my favorite clients last week and the
conversation turned to the government's recent round of tax cuts. "I'm
opposed to those tax cuts," the retired college instructor declared,
"because they benefit the rich. The rich get much more money back than
ordinary taxpayers like you and I and that's not fair."
"But the rich pay more in the first place," I argued, "so it stands to
reason that they'd get more money back." I could tell that my friend was
unimpressed by this meager argument. Even college instructors are a
prisoner
of the myth that the "rich" somehow get a free ride. Nothing could be
further from the truth.
Let's put tax cuts in terms everyone can understand. Suppose that
everyday
10 men go to dinner. The bill for all ten comes to $100. If it was paid
the
way we pay our taxes, the first four men 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.
The 10 men ate dinner in the restaurant every day and seemed quite happy
with the arrangement until 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. Now dinner for the 10 only costs $80.
The first four are unaffected. They still eat for free. Can you figure
out
how to divvy up the $20 savings among the remaining six so that everyone
gets his fair share? The men realize that $20 divided by 6 is $3.33, but
if
they subtract that from everybody's share, then the fifth man and the
sixth
man would end up being paid to eat their meal.
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 paid nothing, the sixth pitched in $2, the seventh
paid
$5, the eighth paid $9, the ninth paid $12, leaving the tenth man with a
bill of $52 instead of $59. Outside the restaurant, the men began to
compare
their savings. "I only got a dollar out the $20," declared the sixth man
pointing to the tenth, "and he got $7!"
"Yeah, that's right," exclaimed the fifth man. I only saved a dollar,
too.
It's unfair that he got seven times more than me!
"That's true," shouted the seventh man. "Why should he get $7 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 he
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
were
$52 short!
And that, boys and girls and college instructors, is how the 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
Switzerland and the Caribbean.
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