A Taxcut Parable Revisited

Below is an email I received several years ago about a parable from the March 4, 2001 edition of the Chicago Tribune. This fable is even more instructive today than when it originally appeared. It’s déjà vu all over again.

If you think the Bush tax cut plan is unfair, read this rebuttal that appeared in the Sunday, March 4 Chicago Tribune. By the way, the ratios are roughly accurate — 10% of the taxpayers pay about 60% of the taxes collected, 30% pay 37%, and 60% collectively pay only 4%.

Every night, 10 men met at a restaurant for dinner. At the end of the meal, the bill would arrive; they owed $100 for the food that they shared.

Every night they lined up in the same order at the cash register to pay the bill. The first four men paid nothing at all. The fifth, grumbling about the unfairness of the situation, paid $1. The sixth man, feeling a little put out, paid $3. The next three men paid $7, $12 and $18, respectively. The last man was required to pay the remaining balance, $59; he realized he was paying for not only his own meal but the unpaid balance left by the first five men.

The 10 men were quite settled into their routine when the restaurant threw them into chaos by announcing that it was cutting its prices. Now dinner for the 10 men would only cost $80. This clearly would not affect the first four men; they still ate for free. The fifth man announced he would now pay nothing either. The sixth man lowered his contribution by 1/3 and only paid $2. The seventh man deducted $2 from his usual payment and paid only $5. The eight man paid $9 instead of his usual $12. The ninth man paid $12, $6 less than before. This left the last man with a bill of $52.

Outside of the restaurant, the men began to compare their savings, and angry outbursts began to erupt. The sixth man yelled: “I got only $1 out of the $20 in cost reduction, and he got $7,” pointing to the last man. The fifth man joined in: “Yeah! I only saved $1 too. It is unfair that he got seven times more than me.” The seventh man cried, “Why should he get a reduction of $7 when I only got $2?”

The nine men formed an outraged mob, surrounding the 10th man. The first four men followed the lead of the others: “Even though we weren’t paying anything in the first place, we didn’t get any of the $20 reduction in cost; where is our share?” The nine angry men then carried the 10th man up to the top of a hill and lynched him.

The next night, the nine remaining men met at the restaurant for dinner. But when the bill came, there was no one to pay it.

See how far we’ve come in just 8 years.

First, the restaurant announces that it’s raising prices back to $100. However, the new restaurant manager promised the first nine men that they would receive a discount on their “fair share” of the bill.

The first five men, who previously paid nothing, are now paid $1 each to eat at the establishment. The sixth, who was paying $2, now pays $1, despite the overall 25% price hike. The seventh, who was paying $5, now pays $4. The eighth, who was paying $9, now pays $8. The ninth, who was paying $12, now pays $11. The (resurrected) greedy tenth man, who was paying $52, is charged $59, leaving a $22 shortfall on the $100 tab.

The restaurant owner borrows the $22 from the Chinese restaurant across the street, promising to pay the money back (with interest) once another patron like the greedy tenth man comes along.

The next day, the first five men each bring a dozen friends to partake of the free meal and collect $1 apiece. The tenth man is nowhere to be found.

At the time, I described the Tribune piece as “[a]n effective rebuttal to the class warfare idiocy spewed by the likes of Daschle and Gephardt.”

Change “Daschle and Gephardt” to “Obama, Reid and Pelosi” and my comment still stands.