Tuesday, December 7, 2004
Here. (via Rishon Rishon)
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...
It reminds me of the parable of the Little Red Hen with updated version (authored by Ronald Reagan!) here.
Although I don't necessarily oppose progressive taxation, parables like these do remind people that there is a point where excessive progressivity becomes terribly counterproductive.
Agreed, and the troubles people run into when they try to fix the system and people start screaming about "fairness" and "these cuts only help the rich!"
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."
But that's not quite right, isn't it? The owner says "I'm going to reduce your bill by $20 and let you run a collective tab for the rest. And I'm going to give the elderly discount food, and throw a few billion dollars worth of pies at Saddam Hussein, and that all goes on your tab, too. And I'll borrow the money to cover it from the Chinese restaurant next door."
Now do you see where even a lifelong Republican like myself starts to wonder if our financial state wasn't better off under the old policy?