Okay, hippy, maybe this will help you understand. Replace the word "beer" with "weed" and "drink" with "smoke" if necessary for your comprehension.
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 seemed quite happy with the arrangement, until one day,
the owner threw them a curve ball. “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 men would 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 a higher percentage
the poorer he was, to follow the principle of the tax system they had
been using, and he proceeded to work out the amounts he suggested that
each should now pay.
And so the fifth man, like the first four, now paid nothing (100% saving).
The sixth now paid $2 instead of $3 (33% saving).
The seventh now paid $5 instead of $7 (28% saving).
The eighth now paid $9 instead of $12 (25% saving).
The ninth now paid $14 instead of $18 (22% saving).
The tenth now paid $49 instead of $59 (16% saving).
Each of the six was better off
than before. And the first four continued to drink for free. But, once
outside the bar, the men began to compare their savings.
“I only got a dollar out of the $20 saving,” 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 benefit than me!”
“That’s true!” shouted the seventh man. “Why should he get $10 back, when I got only $2? The wealthy get all the breaks!”
“Wait a minute,” yelled the first four men in unison, “we didn’t get anything at all. This new tax 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 their 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 government ministers, is how our tax system works. The
people who already pay the highest taxes will naturally 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.
