Dinner & Taxes

humourous email | unknown

[BOBWADE]

I was having lunch with one of my favorite clients last week and the conversation turned to the government's recent round of tax cuts.

'"I'm opposed to those tax cuts," the retired college instructor declared, "because they benefit the rich. The rich get much more money back than ordinary taxpayers like you and me and that's not fair.'"

"But the rich pay more in the first place," I argued, "so it stands to reason that they'd get more money back."

I could tell that my friend was unimpressed by this meager argument. So I said to him, "let's put tax cuts in terms everyone can understand."

"Suppose that every day 10 men go to a restaurant for dinner. The bill for all ten comes to $100. If it was 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 and 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 percentage, being sure to give each a break, and he proceeded to work out the amounts each should pay. And 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 $59.

Outside the restaurant, the men began to compare their savings. "I only got a dollar out of the $20," complained 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."

Then, the nine men surrounded the tenth man (the richest one, paying the most) and beat him up. The next night the richest man didn't show up for dinner, so now the nine men 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, girls and college instructors, is how America's 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 any more. There are lots of good restaurants in Switzerland and the Caribbean."

[steveegg]

I really have no problem with him realizing 1000% profit on his pending sale of the Bucks. That's what investment and business is all about.

Bingo.

Until he struggles to meet modest monthly bills, he has no right to make decisions for ME. He used to struggle to meet modest monthly bills before Kohl's started growing. The problem is, he forgot what it was like, as liberals tend to do when they become rich liberals.

[Centurion2000]

charging people the same price for anything (i.e. a burger costs $2.99, etc) is wrong, and that prices should be based on income too or how much money you have

They used to have a system like that .... it was called haggling.

[keycode]

I'm sorry to blow a small hole in your logic, but when was the last time you saw an "across the board" tax cut?

Remember that this is an "in context" story. In the real world, tax cuts aren't uniform.

[lewislynn]

I'm sorry to blow a small hole in your logic, but when was the last time you saw an "across the board" tax cut?

It took you 2 1/2 yrs to think of it and you're still wrong.

I don't recall the year but I'm pretty sure there was a year when every taxpayer received a tax refund...what would you call that?

[Doe Eyes]

Why should anyone have to pay? Let's just borrow some more money from China.

[keycode]

Two and a half years ... only because I was looking for the story for a friend and stumbled across the board today. And why put a statute of limitations on a discussion? I'm Australian, we can discuss for years. :)

Where I was "wrong" was when I failed to clarify that I was discussing your "everyone should get 20%" doesn't work in reality. I should have asked when you last saw a tax cut that was made across all tax brackets to end up as a flat percentage for everyone? :)

That's not the way tiered taxation has ever worked. Unless you have a flat taxation method, you can't get the result you are looking for. The person in the highest bracket takes the benefits from each previous brackets with them by default.

But I say borrow from a third world African nation. They've just had their debt wiped out, maybe they'd return the favour. :)

Anyhow, I thank you for taking the time to comment two years plus later. :)

[lewislynn]

Where I was "wrong" was when I failed to clarify that I was discussing your "everyone should get 20%" doesn't work in reality.

Well,in reality a restaraunt owner CAN give everyone an across the board discount. Restaraunt owners don't usually divvy up the bills for their customers.

The obviously juvenile made up story about a restaurant owner giving a discount is a poor analogy for OUR taxes...Get it?

[keycode]

We'll have to agree to disagree.

Like I said originally, it's contextual. The government decides it can give a tax break they would divvy it up, exactly like the restaurant owner did in this *analogy*. I think you've missed the point that we are talking about the tax system and not restaurant politics. What a restaurant would do is *irrelevant*

And for you to say that someone didn't get benefit because they "paid more as a percentage of the total" seems ridiculous.

Do you really think about how much extra you are paying in tax as a percentage of the national tax bill when tax cuts roll out? If so, you must have a calculator that has a lot of decimal places!

The "rich man" in the story had seven dollars more in his pocket and got the exact same service. Show me the man who doesn't want an extra $7 for doing nothing different?

And if that man is you, I'll give you my address and you can send me a cheque for $7 whenever you like ... seeing as having that extra $7 is of no benefit to you. :)

[dougie1]

I have heard this story before, but I just found this thread.

This whole situation would be solved if we all got behind and passed the Fair-Tax. The total price for the dinner would go down by about $20 (just to be conservative). The federal sales tax of 23% on the remaining $80 would be 18.40 bringing the total to $98.40 (just about back where we began).

Everyone would keep 100% of their paychecks (getting an effective pay-raise of about 28 - 35%). All income, savings, capital-gains, and investments would be untaxed allowing wealth to increase unrestrained. People would only be taxed when they decided to spend money on “new goods and services”. You would be able to control how much tax you paid to the government by how much you decided by purchase.

I could go on for hours, but John Linder and Neil Boortz already have in their book “The Fair Tax” and the follow-up “The Fair Tax: Answering the Critics”. Read them both (you can get them at the library if you don’t believe in capitalism and don’t want to give money to the charities that receive all the profits from these books).