Question: Which member of Congress do you think shared this great parable to help us understand the current U.S. tax situation?
(The answer is at the bottom of the page.)
Every evening, the same 10 friends eat dinner together, family style, at the same restaurant. The bill for all 10 comes to $100. They always pay it the way we pay taxes:
• The first four are poor and pay nothing.
• The fifth pays $1.
• The sixth pays $3.
• The seventh, $7
• The eighth, $12.
• The ninth, $18.
• The 10th, (the most well-to-do) pays $59.
One night the restaurant owner announces that because they're such good customers, he's dropping their group dinner bill to $80. Let's call that a tax cut.
They want to continue paying their bill as we pay taxes. So the four poorest people still eat free. But if the other six split the $20 tax cut evenly, each would save $3.33. That means the fifth and sixth would end up being paid to eat.
The restaurant owner works out a plan: The fifth person eats free; the sixth pays $2; the seventh, $5; the eighth, $9; the ninth, $12; and the 10th one pays $52.
All six are better off than before, and the four poor people still eat for nothing.
The trouble starts when they leave the restaurant and begin to compare what they reaped from the twenty dollar cut.
"I only got a dollar of it," says the sixth person, "but he (pointing at No. 10) got $7."
The fifth person, who also saved a dollar by getting his meal free, agrees that it's not fair for the richest to get seven times the savings as he.
No. 7, grousing that the wealthy get all the breaks, points out that he only got two bucks.
"Wait a minute," the first four poor people yell in unison. "We didn't get anything at all. The system exploits the poor!"
The nine people jump the 10th and administer a severe beating.
The next night he doesn't come for dinner.
They shrug it off and eat without him. The customary $80 bill comes. Surprise! They're $52 short.
Yes, those who pay the most taxes get the most back from tax reductions.
But tax them too much — punish them for the wealth they may have — and they just might stop bringing their money to the table.
I guess this is why American businesses have about $10 trillion in offshore deposits.
You can’t blame them. After all, they got tired of getting beat up to forfeit their “fair share.”
Time for us to appreciate those who give far more than their "fair share" to the national tax burden!
Answer: Michele Bachmann - the one with the LLM degree in tax law and who worked for the IRS.