copied.
OOT: Story about the tax system.
by: staymanusa (35/M) 01/07/03 01:55 pm
Msg: 750909 of 750924
Obviosly this isn't by me, but I've seen it a few times and its perfect.
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, and the
tenth man, the richest, would pay $59. 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 (in tax language a tax cut).
"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 $80.00. 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 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 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 his earlier $59.
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, but he, (pointing to the
tenth) 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 I did!". 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, a little late
what was very important. They were FIFTY-TWO DOLLARS
short of paying the bill!
Imagine that! And that, boys and girls, journalists
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. Where would that leave
the rest?
Unfortunately, most taxing authorities anywhere cannot
seem to grasp this rather straight-forward logic!
T. Davies
Professor of Accounting & Chair,
Division of Accounting and Business Law
The University of South Dakota
School of Business
414 E. Clark Street
Vermillion, SD 57069
Phone: 605-677-5230
Fax: 605-677-5427 |
