Explaining the tax system

It’s making the rounds again. The parable that explains the tax system. It’s been credited to several people, mostly professors at UGA or U of South Dakota. But the earliest reference I can find is from 2002, and it credits Moon Griffon:

Suppose everyday, 10 men go to dinner. The bill for all ten comes to $100. If it were paid the way we pay our taxes, the first four men 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.

The 10 men ate dinner in the restaurant every day and seemed quite happy with the arrangement until 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.” Now dinner for the 10 only costs $80.

The first four are unaffected. They still eat for free. Can you figure out how to divvy up the $20 savings among the remaining six so that everyone gets his fair share? The men realize that $20 divided by 6 is $3.33, but if they subtract that from everybody’s share, then the fifth man the sixth man would end up being paid to eat their meal.

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 $59. Outside the restaurant, the men began to compare their savings. “I only got a dollar out of the $20,” declared the sixth man pointing to the tenth, “and 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 sat down and ate without him. But when it came time to pay the bill, they discovered something important. They were $52 short!

And that, boys and girls and politicians, 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. There are lots of good restaurants in Switzerland and the Caribbean.

There’s a message in there somewhere. I’m sure of it.

14 Comments

  1. So, Basil. TheRepublicanUnderground.Net. Content?

    [There seem to be several Websites with content in line with Frank’s Republican Underground ideas. That’s why I went with a WordPress blogging system.

    I’ll keep adding links to the site, and they’ll be in the blogrolls of any blog someone creates there.

    I’m blogging at my little blog, as well as polluting IMAO with most of my stuff. I’ll be managing TheRepublicanUnderground.Net from behind-the-scenes, keeping it running for those that want to start their own blogs. – B]

  2. #7 Trish – Apparently, you have never read any of Sanjayrupta Pravati’s previous posts. He is consistently smart like rock. Funny like tree.

    Please don’t tell me I have to stop using the term “libtard”.

  3. Actually, Rush Limbaugh used this analogy back in 2000

    [Like I said, it’s an old one. But still applicable to us today. Thanks for the info regarding the source. Not doubting Rush as a source, but I’m still unable to find any actual reference prior to the 2002 one I cited. If you have a link, please provide. – B]

  4. TheRepublicanUnderground.Net. Content?

    http://groups.yahoo.com/group/RUReadyWarRoom/ is still open as a private place for discussing RU business, and
    the web pages I started are there for discussion/critique/edit as well. If yall are going with your own blogs instead then just say so.

    I’m giving that group one week. If no one but Sulamie and I are interested, everything will be deleted on Saturday.
    What can I say? I’m a conservative; I’ve got too many other things I should be doing.

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