Is the Bush Tax Plan Unfair?
Like you, I get a lot of junk e-mail. But probably no message has bounced back and forth among people interested in taxes more often than the parable below. It puts our tax system, and President Bush’s tax cuts, in terms everyone can understand. Despite my attempts to identify the author, he or she remains anonymous. (It is not, as some e-mails have claimed, an economics professor in South Dakota.) So while another urban legend lives on, I want to share this story with you and relate it to some of the research we have done recently on the income tax–who pays and who doesn’t. Dinner for Ten: Who Pays? Suppose that every day, 10 men go out for dinner. The bill for all 10 comes to $100. They decided to pay their bill the way we pay our taxes, so they divided the bill like this: The first four men–the poorest–would pay nothing. The fifth would pay $1, the sixth $3, the seventh $7, the eighth $12, the ninth $18, and the tenth man–the wealthiest–would pay $59. One day, the restaurant ow
