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Tax Cuts - A Simple Lesson in Economics


So, the restaurant owner suggested that it would be fair to reduce each person's bill by roughly the same amount, and he proceeded to work out the amounts each should pay.

And so:

  • The fifth person, like the first four, now paid nothing (100%savings).
  • The sixth now paid $2 instead of $3 (33% savings).
  • The seventh now paid $5 instead of $7 (28% savings).
  • The eighth now paid $9 instead of $12 (25% savings).
  • The ninth now paid $14 instead of $18 (22% savings).
  • The tenth now paid $49 instead of $59 (16% savings).

    "I Want my "Fair Share!"

    Each of the six was better off than before. And the first four continued to eat for free. But once outside the restaurant, the people began to compare their savings.

    "I only got a dollar out of the $20," declared the sixth person. He pointed to the tenth person "but he got $10!"

    "Yeah, that's right," exclaimed the fifth person. "I only saved a dollar, too. It's unfair that he got ten times more than I got!"

    "That's true!!" shouted the seventh person. "Why should he get $10 back when I got only $2? The wealthy get all the breaks!"

    "Wait a minute," yelled the first four people in unison. "We didn't get anything at all. The system exploits the poor!"

    The nine people surrounded the tenth and beat him up.

    The next night the tenth person 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 didn't have enough money between all of them for even half of the bill!

    And that, boys and girls, journalists and college professors, is how our 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. There are lots of good restaurants in Europe and the Caribbean.

    The above is a simple concept that very few in the Democratic Party understand.

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    Kirk's Recommended Books

    I STRONGLY recommend everyone read these two books first before you spend ANY money on newsletters, financial plans, mutual funds, etc.

    The copyright of the article Tax Cuts - A Simple Lesson in Economics in Investing/Personal Finance is owned by Kirk Lindstrom. Permission to republish Tax Cuts - A Simple Lesson in Economics in print or online must be granted by the author in writing.

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