Better Living Through Blogging!: Eat The Rich

February 04, 2003

Eat The Rich

I can't claim that this is accurate, but it sounds about right...it's one of those e-mails that makes the rounds, similar to an urban legend, but concerning tax cuts. I'm posting it to see if anyone can attest to the accuracy, or poke holes in it...

"The Tax System and Tax cuts in terms that most people can understand."

Suppose that every day, ten men of various means go out for dinner. The bill for all ten men (@ $10 each) comes to $100. They decided to pay their bill in the same way we pay our taxes. The story went 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.
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 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...

...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 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.
So now 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.
He 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 (wealthiest) man and beat him up. The next night tending to his injuries, 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 were $52 short!

And that, boys and girls (and you journalists, and college professors)
is how cuts in the tax system works.

Posted at February 4, 2003 09:24 PM

COMMENTS!

David,

I like your tale about the way the tax system works, and it does make it easier to understand. However, the tax system is inherently flawed and still needs to be overhauled. See, in your story you forgot that the 9 & 10th man regularly hide (shelter) portions of their income, therefore they do not pay as much as they should. Now, this argument could go on forever and I will admit that the liberal media is taking the idea of exploiting the poor way too far. However, if you were to ask the media to show the other side of the story, you would never do it. It is hard to get sympathy for the richest Americans, and therefore there is no story according to the media. It is simple media bias.

The fix to the system, albeit radical, it has been suggested by both sides of the political fence, is to scrap the IRS and go to a National Sales Tax or a Flat Tax system with no rules for sheltering income. In a flat tax system everyone pays the same amount. To use your example, 10 men go to lunch and under the Flat Tax system, each person pays $10 of the tab, period and end of discussion.

In the National Sales Tax Plan, each person is taxed on their spending habits. Back to the 10 men; if they go to lunch everyday, then they will each pay the same portion of the tab. However, if gentleman #1 cant go to lunch on a given day, then he is not taxed because he did not purchase a lunch on that day.

Just my 5 cents worth,

Eric

Posted by: Eric at February 5, 2003 09:06 AM

crazy crazy!

Posted by: John Balter at April 15, 2003 04:13 PM

This first appeared as a column in the Victoria (BC, Canada) Times-Columnist.

Posted by: Jim i nVancouver at August 21, 2003 07:54 PM

Eric....put your 5 cents back in your pocket. The rich are taxed more i.e should get the bigger deductions. Rich don't hide their money in "tax shelters" or use "loopholes" they read the tax code and make their money the way the government wants them to e.g. buisnesses. Buisnesses spend money wich spurs the economy. Buisnesses employ people giving them money reducing the enemployed and homeless spuring the economy. Whenever the government spurs the economy it creates inflation. When Buisnesses spur the economy it creates further wealth and more jobs. Punish the rich they lay off people...they lay off people and people are living off the government....to fix this the government spurs the economy....which in turn causes inflation and those people now have jobs again but pay more for products. Stop blaming the rich...if you must blame...blame yourself for not creating a buisness to employ others.

Posted by: Steve at October 8, 2003 05:19 PM

No cause is so right that one cannot find a fool following it.

Posted by: Bromberg Brian at January 25, 2004 02:52 PM