got this from another forum


Subject: Taxes, worth the read

Sometimes Politicians can exclaim; "It's just a tax
cut for the rich!", and it is just accepted to be
fact. But what does that really mean?
Just in case you are not completely clear on this
issue, we hope the following will help.

Tax Cuts - A Simple Lesson In Economics

This is how the cookie crumbles. Please read it
carefully.

Let's put tax cuts in terms everyone can
understand. Suppose that every day, ten men go out for
dinner. 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 $7.
The eighth $12.
The ninth $18.
The tenth man (the richest) would pay $59.

So, 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.

"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 each
end up being 'PAID' to eat their meal.

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

And so:
The fifth man, 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).

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. 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 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. The 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
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.

David R. Kamerschen, Ph.D.
Distinguished Professor of Economics
536 Brooks Hall
Universityof Georgia

One should always check snopes before passing on things like this...

Snopes.com - How Taxes Work

very well said....maybe SURGE needs to read this