Econ 101

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sherod

Subject: FW: Econ 101

>>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 pay $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, PhD
>>Professor of Economics
>>University of Georgia

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The Cable Cooker

Topic - Econ 101 - sherod 22:27:22 03/26/07 (1)

I have to share this..... - *Michael Z* 03:56:25 03/27/07 (0)

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