Typical Conservative Slant

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From:
To: Undisclosed-Recipient:;
Sent: Tuesday, September 21, 2004 2:06 AM
Subject: Fw: Taxation:


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 se! emed 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 nothi! ng (100% savings).
* The sixth now paid $2 instead of $3 (3! 3% savin gs).
* 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 tr! u! e!!" 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 HallUniversity of Georgia




Chuck Vanderveldt wrote:


The way taxation is represented in the below message is how our system is SUPPOSED to work in an ideal world. The republican party and mega corporations would have us all believe this is how it DOES work. There are a few twists that have been left out by the professor who wrote the metaphor below.

First of all, the first four men (the poorest) may well pay nothing for the meal. You can bet they still had to pay their share for gas in the carpool they rode over in. The richest guy at the table would make a windfall profit off of that since he owns the only oil company in town and is over charging for his goods. They would still pay a portion of the tip. Since they paid "nothing" for the meal, they were only allowed to have a wilted salad, some cold mac & cheese, and a sip of water. Serves them right, lazy-ass poor folk. Hell they only worked a 12 hour shift at minimum wage with 0 benefits to earn their meal.

Secondly, the way the government really divides up tax cuts would have the meal paid for more like this: The first four men (the poorest) would still pay nothing for their meal. However, the price of the gas they buy to get to the restaurant would increase by 50%. Since the restaurant owner is now making less profit, he would cut out the dressing on the wilted salad and switch to cheap, fake cheese on the mac. The richest guys would refuse to pay into the tip fund and the poorest 5 would have to divide up the $20 cost for that. That would mean each of the 5 poorest diners would have to pony up an extra $4 in hidden taxation.

Thirdly, while the 6th, 7th, & 8th men would pay $3, $7, & $12 respectively, the richest two diners would sneak an expensive bottle of Cognac out of the lounge and charge it to the bar tab of those middle class three.(huge federal deficit, trade imbalances, cutting funds for school lunches etc) A back door charge of probably $250 (using the same relative percentages in the example). Of course, the three middle class men wouldn't actually get to drink any of the Cognac. So for the cheeseburger and diet coke that would be served, the middle class three would really be paying $86.33, $90.33, and $95.33.

El numero Quattro, the 9th man would pay $18 and eat a pretty good steak, medium rare. He would get one glass of a medium quality red wine and a small sip of the Cognac. The richest man would be billed $59 but would complain that his fillet mignon was cooked wrong, the creme' brulet was not up to his standards and the bottle of (put your favorite expensive champagne here) was not the right year. Therefore he would refuse to pay the full amount and tell the owner to be happy with the $1.77 he is willing to give him. (97% reduction, that's about how much the IRS figures big corporations avoid paying by using loop holes in the system). Since the restaurant is now losing money (small spelling point here - it is LOSING not LOOSING) the owner would relocate his establishment to the below mentioned Europe or Caribbean (outsourcing overseas). The two richest guys would simply dine over there. The three middle class diners would now eat the mac & cheese formerly served to th! e 4 poorest and the bottom most 5 would hope like hell that the Salvation Army shelter is still open and hasn't been replace by the 2 rich guy's latest strip mall. And that is the reality of our tax system, even for smart-ass college professors with white beards and leather patches on their elbows.

Chuck

by the way, you deserve an award for this one. perfect and beautiful.

ted