Guest guest Posted February 21, 2004 Report Share Posted February 21, 2004 A different perspective on the world... > > -------------------------------- > > Politicians can 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, we hope the > following > will help. > > > Tax Cuts - A Simple Lesson In Economics > > > This is how the cookie crumbles. Please read it carefully. > > > 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 inEuropeand theCaribbean. > > > David R. Kamerschen, Ph.D. > > Distinguished Professor of Economics > > 536 Brooks Hall > > University of Georgia Mail SpamGuard - Read only the mail you want. http://antispam./tools Quote Link to comment Share on other sites More sharing options...
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