Originally Posted by Lindy

I'm posting this, a variation on a quote in an earlier post, because not even one person commented on it. This has been floating around in my computer for so long that I can't even remember where it originated. It even contains a violent revolution. Well, sort of.
Lindy

Redistribution of Wealth!

This is a simple way to understand how redistribution of wealth in the form of a tax cut works. Read on -- it might make you think. Well, some of you.

Let's put tax cuts in terms everyone can understand. Suppose that every day, ten men go out for lunch. The bill for all ten comes to $100. If they paid their restaurant bill the way we now 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 rich guy -- would pay $59.

That's what they collectively decided to do. The ten men ate lunch 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 taxcut). "Since you are all such good customers," he said, "I'm going to reduce the cost of your daily meal by $20." So now lunch for the ten only cost $80.00.

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 divide the $20 reduction 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 percentage, and he proceeded to work out the amounts each should pay. And so the fifth man (joining the first four) 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 (now joined by the fifth man) continued to eat for free.
But once outside the restaurant, the men began to compare their savings.

"Hey, I only got a dollar out of the $20," declared the sixth man, "But he," pointing to the tenth "got $7!"

"Yeah, that's right," exclaimed the fifth man, (who now paid nothing at all) "I only saved a dollar too. It's unfair. That rich guy got seven times as much as I did!"

Right!" shouted the seventh man, "Why should he get $7 back when I got only $2?" "The wealthy get all the breaks!"

"Wait just a minute here!" yelled the first four men (who still paid nothing) in unison, "Where is our share? We didn't get anything at all. This system exploits the poor!"
The nine men then turned on the tenth and beat the crap out of him.

The next day the rich guy 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, 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, professors, "activists," liberals and conservatives, 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 straightforward logic.