NO. 881 HOW OUR TAX SYSTEM WORKS!
No. 881
Jim Davidson -- NEWSPAPER COLUMN
HOW OUR TAX SYSTEM WORKS!
Did you hear about the man who tossed and turned and did not sleep a wink all night? It finally dawned on him.
This is what I am hoping will happen for some people who will read this column. A friend sent me an article recently that is most revealing. It has been around for some time but contains information that every American should know and understand. It is about “How Our Tax System Works.”
It begins, “Suppose that every day 10 men go out for a beer and the bill for all 10 comes to $100. If they pay the bill the way we pay our taxes, it would go something like this.
“The first four (the poorest) would pay nothing. The fifth would pay $1.00. The sixth would pay $3.00. The seventh would pay $7.00. The eighth would pay $12.00. The ninth would pay $18.00. The 10th man (the richest) would pay $59.00. So that is what they decided to do. The men drank in the bar every day and seemed quite happy with this arrangement, until one day, the owner threw them a curve. ‘Since all of you are such good customers’, he said, ‘I am going to reduce the cost of your daily beer by $20.00’. Drinks for the men now cost just $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 drink for free. But what about the other six men, the paying customers? How could they divide the $20.00 windfall so that everyone would get their share?” They realized that $20.00 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 wind up being paid to drink his beer. So, the bar 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!
“The fifth man, like the first four, now paid nothing (100 percent savings). The sixth now paid $2.00 instead of $3.00 (33 percent savings). The seventh now paid $5.00 instead of $7.00 (28 percent savings). The eighth now paid $9.00 instead of $12.00 (25 percent savings). The ninth now paid $14.00 instead of $18.00 (22 percent savings). The 10th now paid $49.00 instead of $59.00 (16 percent savings).
“This way each of the six was better off than before, and the first four continued to drink for free. But once outside the restaurant, the men began to compare their savings. ‘I only got a dollar out of the $20.00,’ declared the sixth man. He pointed to the 10th man, ‘but he got $10.00.’ ‘Yeah that’s right,’ shouted the seventh man. ‘Why should he get $10.00 back when I got only $2.00? The wealthy get all the breaks!’ ‘Wait a minute,’ yelled the first four in unison. ‘We didn’t get anything at all. The system exploits the poor.’ The nine men surrounded the 10th and beat him up.
“The next night the 10th man did not show up for drinks, so the nine sat down and had beers without him. But when it came time to pay the bill, they discovered something important. They did not have enough money between all of them to pay 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 might not show up anymore.”
For those who understand, no explanation is needed. For those who do not understand, no explanation is possible. You know, it’s good to have this in print so we can go back and study it from time to time.
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(EDITOR'S NOTE: Jim Davidson is a public speaker and syndicated columnist. You may contact him at 2 Bentley Drive, Conway, AR 72034. To begin a bookcase literacy project visit www.bookcaseforeverychild.com. You won’t go wrong helping a needy child.)
