In a small rural community ten boys graduated from High School and went to work at a local rabbit ranch. As luck would have it each boy qualified for a different job. Their jobs ranged from Rabbit Feeders to Sales & Marketing and each boy was paid a different wage rate.
The years flew bye yet their friendship and loyalty to the rabbit ranch remained strong. When the boys turned 21 they began to meet at a local bar for cocktails on Thursday nights. After leaving the ranch they’d sip their drips, talk about the old HS football team, how their families were doing and how their work was going at the rabbit ranch. When the night came to an end their bar tab was generally $100.
They all knew there was a significant difference in their pay so they came up with a plan they thought would be best for all to pay their bar tab. The first four boys (the lowest paid of the ten) were allowed to pay nothing. The fifth boy was asked to pay $1.00 while the sixth boy was asked to contribute $3. The seventh agreed to lay down $7 and the eighth boy tossed in $12. The ninth gladly kicked in $18 and the tenth boy (the one with the highest paying job) coughed up the remaining $59.
They used this arrangement every Thursday until one week when the bar owner threw the boys a curve. He walked over to their table and handed them the bill and he said: “You boys are such wonderful customers; you have been coming here for over two years every Thursday having a good time. I am going to reduce your bar tab by $20. From now on when you boys come in on Thursday’s you will only have to pay $80 not the regular $100.00.
The boys were delighted with the owners new offer and they quickly agreed to still continue to use a sliding scale to pay their new bar tab. As before the better paid friends agreed to put in a bigger share to pay the tab; however they were not sure how to divide up the $20 reduction?
They still felt the first four should not have to pay anything; but if they divided the $20 savings offered by the owner by six that would mean a $3.33 savings per boy. If they subtracted $3.33 from each of their current shares, the fifth and sixth boy would both wind up receiving money for their night of drinking and that just didn’t seem right.
Seeing the dilemma the boys were in the bar owner suggested perhaps they should use the same system Washington DC uses to compute income taxes. The boys thought about it and agreed to give it a try; they let the bar owner calculate their new reduced shares based on the federal income tax system.
Under the new reduced pay system the fifth boy like the first four, would pay nothing (a 100% savings). The sixth boy would now only have to pay $2 instead of $3 (a 33% saving). The seventh boy would now pay only $5 instead of $7 (a 28% saving) and the eighth boy would now be required to pay $9 instead of $12 (a 25% saving). Finally, the ninth boy would be required to contribute $14 instead of $18 (a 22% saving) and the tenth boy – the highest paid boy at the ranch - would only pay $49 instead of $59 (a 16% saving).
Proud of his comprise solution, the bar owner was certain the boys were all better off now than before.
Using the new system the boys paid their $80.00 bar tab then left the bar. Once outside they began to re-think the new pay plan. “I only got one dollar out of the $20 savings,” declared the sixth boy!” and then he pointed to the tenth boy and said” but he got a $10 savings!”
“That’s right,” exclaimed the fifth man. “I only saved one dollar too and it isn’t fair that he gets ten times more of a benefit than me!” “That’s true!” shouted the seventh man. “Why should he get $10 back, when I only got $2? I guess my Dad was right, the wealthiest always get all the breaks!”
Just then the first four boys who paid nothing stepped forward and said “what the heck are you guys complaining about? Look at us; we didn’t get any savings at all from the $20.00 reduction. This new system sucks - we are the ones who are being exploited!”
The nine boys were now all so worked up and irate with the new system that they surrounded the tenth boy and beat him up and left him bleeding in the street as they walked home. The next week, after leaving work at the rabbit ranch ,the nine boys met at the bar for their weekly night out; however the tenth boy never did show up. The nine boys who went out still had their drinks and conversations without him.
Just like always towards the end of the night the bar owner came over to their table and handed them the bar tab. The nine boys quickly realized that they did not have enough money between them to cover even half the bill.
And that, boys and girls is the problem we will face every time someone comes up with an idea to make our federal income tax system fairer. Some people will always be unhappy with the changes. Regardless of who proposes reductions the wealthy will always be the ones to receive the greatest reduction.
So the next time someone suggests we tax the wealthier workers at the rabbit ranch more just because they have better paying jobs keep in mind they might not show up on Thursday night anymore. In fact, they might just start going to a bar overseas on Thursdays where there is a friendlier atmosphere and they believe they are treated better.
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