>> Sometimes politicians, journalists and others 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, I
> >> hope the following will help. Please read it carefully.
> >>
> >> Let's put tax cuts in terms everyone can understand.
> >>
> >> Suppose that every day, ten men go out for dinner and 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 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 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." Dinner 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 eat 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 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 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 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 anymore. In fact,
> >> they might start eating overseas where the atmosphere is somewhat
> >> friendlier.
> >>
> >> David R. Kamerschen, Ph.D
> >> Professor of Economics
> >> University of Georgia