Bistro Economics...

This is adapted from an e-mail that is floating around - it is not 100% accurate - but close enough to illustrate the point!

Suppose that every day, ten ladies go out for lunch. The bill for all ten comes to $100.
If they decided to pay their bill in the same manner that we in the U.S. pay our taxes, it would look something like this:

• The first four ladies, (the poorest) would owe nothing.
• The fifth would pay $1.
• The sixth would pay $3.
• The seventh would pay $7.
• The eighth would pay $12.
• The ninth would pay $18.
• The tenth woman, (the richest) would pay $59.

So, that's what they decided to do.The ten ladies ate their lunch every day and seemed quite happy with the arrangement, until one day, the owner of the restaurant 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.' Your lunch tab for all 10 of you will now cost just $80.
The group still wanted to pay their bill the way we pay our taxes so the first four ladies were unaffected. They would still eat for free. But what about the other six - the paying customers? How could they divide the $20 windfall so that everyone would get their 'fair share?' They realized that $20 divided by six is $3.33. But if they subtracted that from everybody's share, then the fifth lady and the sixth, would each end up being paid to have lunch! So, the 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 lady, like the first four, now paid nothing (100% savings).
• The sixth now paid $2 instead of $3 (33%savings).
• The seventh now pay $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, they began to compare their savings.'I only got a dollar out of the $20,'declared the sixth lady. She pointed to the tenth woman,' but she got $10! "Yeah, that's right,' exclaimed the fifth. 'I only saved a dollar, too. It's unfair that she got ten times more than I got' 'That's true!!' shouted the seventh lady. 'Why should she get $10 back when I got only two? The wealthy get all the breaks!''Wait a minute,' yelled the first four women in unison. 'We didn't get anything at all. The system exploits the poor!' The nine ladies surrounded the tenth and beat her up!

The next day the tenth woman didn't show up for lunch as usual, so the nine sat down and had their meal without her. 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, ladies and gentlemen, 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 anymore. In fact, they might start having their lunch overseas where the atmosphere is somewhat friendlier.