posted 10-15-2004 04:09 PM         

This article appeared in the February 23, 2002
issue of the Lakeshore News. It
was written by Ron Adams, a local financial advisor
who writes a regular column in the paper

I was having lunch at PJ's with one of my favourite
clients last week and the conversation turned to the
government's recent round of tax cuts.
"I'm opposed to those tax cuts," the retired college
instructor declared, "because they benefit the rich.
The rich get much more money back than ordinary
taxpayers like you and I and that's not fair."

"But the rich pay more in the first place," I argued,
"so it stands to reason that they'd get more money
back."

I could tell that my friend was unimpressed by this
meager argument. Even college instructors are a
prisoner of the myth that the "rich" somehow get
a free ride. Nothing could be further
from the truth.

Let's put tax cuts in terms everyone can understand.
Suppose that everyday 10 men go to PJ's for dinner.
The bill for all ten comes to $100. If it was paid the
way we pay our taxes, the first four men 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.

The 10 men ate dinner in the restaurant every day
and seemed quite happy with the arrangement
until 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. Now
dinner for the 10 only costs $80.

The first four are unaffected. They still eat for
free. Can you figure out how to divvy up the
$20 savings among the remaining six so that
everyone gets his fair share?

The men realize that $20 divided by 6 is
$3.33, but if they subtract that from
everybody's share, then the fifth man and
the sixth man would end up being paid to
eat their meal. 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 $59. Outside
the restaurant, the men began to compare
their savings.

"I only got a dollar out the $20," declared the sixth
man pointing to the tenth, "and he 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 man surrounded the tenth and beat him
up. The next night he 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 were $52 short!

And that, boys and girls 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. There are lots of good
restaurants in Switzerland and the Caribbean.

posted 10-15-2004 05:07 PM         

------------------

Current mods: Mopar dual exhaust & front mudflaps; MacMotorsports Air Intake;
Real Rod Air Patrol; Graphics by Balistek Designs; ($8) Chrome grille; Chrome
tire valve-stem covers; Painted rear bumper lettering; Prowler Pro Gears; Synthetic
Oil; Raybestos Ceramic Brake Pads; TGF Door Panel Inserts & Headrest Covers;
SheepskinExpress Sheepskin Seatcovers; Grille Light; Pinstriping by Bo Boring;
Painted Valve Cover; Window Tinting; Windshield Visor Banner; Front Bumper
Removal / Relocation of Front Turn Signal Lights; Real Rod Transmission Cooler
Cover, Sill and Carpet Covers, Aero Front Covers and Roadster Rear Pan, rear
bumpers removed; rear mudflaps; painted calipers; Prowler Products by Gary
Drilled Rotors, front and rear; Painted tach; Jay's Aluminum Billet Center Caps
w/shimmers, Chrome Lugnuts and Chrome Radio Bezel Shimmer; Dash Rings;
Windshield Wiper Arm Removal; Fender Trim; Speaker Replacement; Painted
Plenum; Painted Radiator Crossmember; Painted Rear Mudflaps; Air Patrol
graphics; Aluminum engine compartment support bars; PlasmaGlow 7-color LED
Underbody Kit; Dash Designs Dash Mat; Airbrushed Rear Trim Panel and Painted
Headlight Caps.

More 'Pumpkin' photos . . . . . More cars and other stuff

New pictures in Personal Scrapbook (02/23/03)

"I may have to grow older, but I do not have to grow up!"