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Let's put tax cuts in terms everyone can understand. Suppose that every day 10 men go to a restaurant for dinner. The bill for all ten comes to $100. If it was paid the way we pay our taxes, the first four men would pay nothing; the fifth would pay $1; the sixth would pay $3; the seventh $7; the eighth $12; the ninth $18. The tenth man (the richest) would pay $59.
The 10 men ate dinner in the restaurant every day and seemed quite happy with the arrangement until the owner threw them a curve. Since you are all such good customers, he said, I'm going to reduce the cost of your daily meal by $20. Now dinner for the 10 only costs $80.
The first four still eat for free. The restaurant owner suggested that it would be fair to reduce each man's bill by roughly the same percentage, being sure to give each a break, and he proceeded to work out the amounts each should pay. And so now the fifth man paid nothing, the sixth pitched in $2, the seventh paid $5, the eighth paid $9, the ninth paid $12, leaving the tenth man with a bill of $52 instead of $59. That's fair, right?
But then, something happens. Previously, the owner validated the parking tickets, so it ended up being free for the customers. Since the owner now has less money, he stops validating the parking. Poor and rich alike pay $2 to park. This is no big deal for the top 30%. Seventh is just where he was. Eighth is still up a $1, Ninth up $4 and the richest is better by $5. The other 6 though, are actually in worse shape.
The richest guy starts hinting that he may not come back. He doesn't think it's fair because he pays the most. So, the owner offers to take another $10 off. It's divided much like the first break.
To further economize, the owner stops giving the free bread basket to diners. The top four really didn't need it anyway, because they were already ordering an appetizer, entree and dessert - plenty of food. Five and six are okay too, because they're getting big sandwiches with salad or fries, and the portions are still pretty generous. The bottom four however, had been ordering just a small salad or soup. They were kind of counting on that bread to help fill up. They walk away from the table not quite satisfied.
Under still more pressure from the wealthy, the owner further economizes by firing one of his staff. This leads to longer waits for and more griping from everyone about the pace of service.
LESSON: Tax cuts do not pay for themselves. They must be matched with spending cuts or increased service fees to avoid deficits. In most cases, those are going to affect the most needy the hardest.
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