[DAVID GAGNARD]

Since it is tax season....
> Let's put tax cuts in terms everyone can understand.

> Suppose that every day, ten men go out for beer and 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 would pay $7.
> The eighth would pay $12.
> The ninth would pay $18.
> The tenth man (the richest) would pay $59.

> So, that's what they decided to do.

> The ten men drank in the bar every day and s eemed quite happy with the
>arrangement, until on 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 beer by $20."Drinks for the ten now cost just $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 drink for free. But what
>about the other six men - the paying customers? How could they divide the
>$20 windfall so that everyone would get his 'fair share?' They 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 drink his beer.

> So, the bar 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 p ay.

> 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 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 drink 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 I!"

> "That's true!!" shouted the seventh man. "Why should he get $10 back
>when I got only two? 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 drinks, so the nine sat
>down and had beers 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 anymore. In fact, they might start drinking
>overseas where the atmosphere is somewhat friendlier.

> David R. Kamerschen, Ph.D.
> Professor of Economics
> University of Georgia

>For those who understand, no explanation is needed. For those who do not
>understand, no explanation is possible.