This started out as a story my dad email me, and since I thought it was so amusing I wanted to put it up. So while I didn’t write it, (and I have no idea who did) I did edit it to correct a logic flaw.
"Let's put tax cuts in terms everyone can understand. Suppose that every day, ten men go out for dinner, to this restaurant that’s charges by the table, and not by the person. 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 decided to give them a break.
"Since you are all such good customers," he said, "I'm going to reduce the cost of the table by $20."
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 who pointed to the tenth. "But 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 ate without him. But when it came time to pay the bill, they discovered, a little late the flaw in their logic. They were FIFTY-TWO DOLLARS short of paying the bill!"
Look the rich do get the biggest tax break but they pay more to begin. So a 10% tax break for someone paid $100K in taxes is $10K, but the same break for someone paying $10K is a $1,000. Ok it isn’t “fair” that the rich have more money, but that is how life works. While people whine about the rich get tax breaks that are bigger than their tax burden, they forget the $90K tax burden the rich still pay. To make the it’s budget the government needs $20K from each taxpayer, but only gets ~$11K, so the average taxpayer only pays 55% of necessary amount. Where do you think that extra $9K comes? In 2000 the top 5% of taxpayers (those making more than $130K a year) paid more 56.7% of the taxes.
I know a lot of families where the one of the people work, just to pay the taxes of the other. How depressing would that be? Sure you have money as a couple, but your entire salary goes straight to the IRS.
Voodoo economics works on the theory that when a rich person gets a big tax break that money is reinvested into the economy. Yes, poorer people can use the money more to buy clothes or medical care, but that money expands the economy minimally by increasing demand. However, a rich person gets more money back, and since they don’t need the money to live they will invest it in making more money. Which means they make jobs and help every one else indirectly, but since there is a time lag people don’t ever think it is working. But Voodoo and economic theory are the subject for another day!
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