Tax Cuts - A Simple Lesson in Economics*

   This is how the cookie crumbles. Read it carefully. 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 5th pays $1
   Sixth would pay $3
   The seventh $7
   The eighth $12
   The ninth $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." So now dinner for the
   ten only cost $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, 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 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 $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. "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 $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
   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 at the table
   anymore. There are lots of good restaurants in Europe and the
   Caribbean.