How taxes work - 10 Men Go To Dinner
Suppose that every day, ten men go out for dinner
and the bill for all 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 like they do now with the present income
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 of the
So that is what the ten men decide 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.
"Since you all are such good customers I am going
to reduce the cost of your daily meal by $20".
Dinner for the 10 men now costs just $80...
The group still wanted to pay the bill the same
way that they paid their taxes so the first four
men were unaffected. They would still eat for
free. But what about the other six men -- the
Paying customers? How could they divide the $20
windfall so that everybody would get his "Fair
They realized that $20 divided by six is $3.33.
But if they subtracted that from everybody's
share, then the fifth and sixth man would each end
up being paid to eat their meal...
So, the restaurant owner suggested it would be
fair to reduce each mans bill roughly the same
amount; and proceeded to work out the amounts each
man would pay.
The fifth, like the first four now paid nothing
The sixth man now paid $2 instead of $3 (33%
The seventh man now paid $5 instead of $7 (28%
The eight man now paid $9 instead of $12 (25%
The ninth man now paid $14 instead of $18 (22%
The tenth man now paid $49 instead of $59 (16%
Each of the six was better off then before. And
the first four continued to eat for free. But once
outside the restaurant, the men began to compare
"I only got a dollar out of the $20," declared
the sixth man. He pointed to the tenth man "but he
"Yeah, that's right," exclaimed the fifth man. "I
only saved a dollar, too. Its unfair that he got
ten times more than me!?"
"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 man and beat
The next night the Tenth man did not 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 didn't have
enough money between all of them for even half the
And that Boys & 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 might
not show up anymore. In fact, they might start
eating overseas where the atmosphere is somewhat