“And the great owners, who must lose their land in an upheaval, the great owners with access to history, with eyes to read history and to know the great fact: when property accumulates in too few hands it is taken away. And that companion fact: when a majority of the people are hungry and cold they will take by force what they need. And the little screaming fact that sounds through all history: repression works only to strengthen and knit the repressed.”
John Steinbeck
Buddabull says:
Suppose
that every day, ten men go out for beer 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 drank in the bar every day and seemed quite happy with
the
arrangement, until one day, the owner threw them a curve ball. “Since
you
are all such good customers,” he said, “I’m going to reduce the cost of
your
daily beer by $20″. Drinks for the ten men would 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 drink for free. But what
about the
other six men ? 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 drink his beer.
So,
the bar owner suggested that it would be fair to reduce each man’s bill
by a
h higher percentage the poorer he was, to follow the principle of the
tax
system they had been using, and he proceeded to work out the amounts
he
suggested that each should now pay.
And
so the fifth man, like the first four, now paid nothing (100% saving).
The
sixth now paid $2 instead of $3 (33% saving).
The seventh now paid $5 instead
of $7 (28% saving).
The eighth now paid $9 instead of $12 (25%
saving).
The ninth now paid $14 instead of $18 (22% saving).
The tenth now
paid $49 instead of $59 (16% saving).
Each
of the six was better off than before. And the first four continued to
drink
for free. But, once outside the bar, the men began to compare
their
savings.
“I
only got a dollar out of the $20 saving,” 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 benefit 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. This new tax 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 drinks so the nine sat down
and
had their beers 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 government ministers, is how our
tax
system works. The people who already pay the highest taxes will
naturally 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 drinking overseas, where the atmosphere is
somewhat
friendlier.
David
R. Kamerschen, Ph.D. ? Professor of Economics.
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17th January 2012 at 9:04 pm