The following conservative parable is making the rounds on the internet. I submit it only so that those of you who read only such sites as Daily Kos will see that your accustomed narrative about greedy millionaires has an opposite reality for readers of publications like the WSJ.
How Taxes Work
by T. Davies
This is a VERY simple way to understand the tax laws. Read on – it does make
you think!! Let’s put tax cuts in terms everyone can understand. Suppose that
every day, ten men go out for dinner.
The bill for ail 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
$7, the eighth $12, the ninth $18, and 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 (in tax language, a tax cut). “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 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 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, but he (pointing to the tenth man), 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 man 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, the nine men discovered — a little late — what was very important.
They were FIFTY-TWO DOLLARS short of paying the bill! Imagine that! And that,
boys and girls, journalists and college instructors, is how the 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. Where would that leave the rest? Unfortunately, most
taxing authorities anywhere cannot seem to grasp this rather straight-forward
logic!
christopher says
What should be done is that the percentages should remain unchanged. The richest paying 59% of $80 or about $48. However that’s academic. Back in the real world if the tenth guy didn’t show up he wouldn’t get services either. Maybe the 5th and 6th should have been paid to eat – isn’t that the earned income tax credit?
nopolitician says
Back in the real world, if the 10th guy — the richest — didn’t show up (i.e. stopped working), someone would take his place to meet the demand that is now being unmet. Maybe 3 or 4 people would, in fact.
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p>The most poisonous part of the conservative narrative is that rich people create jobs. That is false — demand creates jobs. I wish someone like Bill Gates would offer $1 million to someone to start a company in Somalia, no taxes, no rules, no government interference. Without all that “regulation” and plenty of capital, it should take off, right?
sabutai says
The example would include the fact that the richest person owns the restaurant, so ends up paying nothing at all. In fact, he ends up profiting from the encounter because his share of the bill goes right back into his pocket, and the other nine are paying him for the privilege.
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p>Of course, that would get in the way of the narrative.
farnkoff says
are a cook, a dishwasher, and a waiter. Maybe that’s why they get to eat for free- it’s one of their few job perks. The guy paying $59 was most likely born rich, and went on to become either a little richer or a lot richer as life went on.
kbusch says
We’ve seen this point before. We know that conservatives, particularly of the libertarian strain, hate progressive taxation. I don’t think the somewhat ill-fitting metaphor illuminates their critique tax policy particularly either.
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p>For example, participation in society is not quite as voluntary as one’s selection of fellow diners or restaurants.
somervilletom says
There are other regions in the “real world” that Sabutai describes.
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p>In another real world, the others not only beat up the rich man, they then take all his money. They gather their friends, and the resulting mob follows him home, and ransacks and burns his home. They see that his is actually the smallest of the mansions in his enclave, and they do the same with his neighbors.
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p>The rich men band together, hire poor folks to defend them, and buy guns for them. They discover that one or two of the poor folks they hire tell their poor neighbors where they’ll be, so that the mob knows just where to lie in ambush.
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p>The rich men discover that, in fact, there are 99 angry poor folk for every one of them even including their mercenaries. The poor folk — having nothing left to lose because the rich have taken it all — are more than willing to run against the guns in wave after wave, night after night. Blood runs in the streets of the wealthy enclave, tens of poor for each wealthy — but only a handful of wealthy and hired guns to start with.
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p>In short, the scene descends into absolute chaos and anarchy, the chaos and anarchy of the Dark Ages.
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p>There is no good outcome for this path. Humanity has done this, over and over throughout human history. It seemed that, for a time, western society had learned from the mistakes of the Dark Ages and found a better way — reaching its pinnacle in America of the late 1950s and early 1960s.
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p>All that changed with the election of Ronald Reagan in 1980. We see now that the fall of the Soviet Union was only the first act; three short decades later, Ronald Reagan’s America went the same way.
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p>That, in my view, is how this “conservative narrative” plays out.