Letters to the editor
A plethora of negative letters in the Daily in recent months describing President Bush as a war monger and a shill for the rich may be politically correct, but their authors too often ignore history and economic reality.
In 1938, Neville Chamberlain was politically correct – a passionate pacifist – while Winston Churchill was the dangerous war monger demanding action against Hitler, that generation’s villain.
Interestingly, Churchill, not Chamberlain, is now widely viewed as the greatest leader of the 20th century. But that is a topic for another day.
Today, I want to focus on Bush, the “shill” for the rich. The most recent proof of this bias is the president’s economic package sent to Congress last month. Critics have been quick to point out that the wealthy benefit much more than the poor or middle class from the tax cuts contained in this package. What better evidence of Bush’s bias. Maybe not!
Recently, I received the following description of how our tax system works from a good friend, Lay Gibson, who is an economics and regional geography professor at the University of Arizona.
Dr. Gibson says: “This is a very simple way to understand the tax laws. Let’s put tax cuts in terms everyone can understand. Suppose that every day 10 men go out for dinner together. The bill for all 10 comes to $100. If they paid their bill the way we pay our taxes in America, it would go something like this. The first four men (the poorest) would pay nothing; the fivth would pay $1; the sixth would pay $3; the seventh would pay $7; the eighth would pay $12; the ninth would pay $18; and the 10th (the richest) would pay $59.
“That’s what they decided to do. The 10 men ate dinner in the restaurant every day and seemed quite happy with the arrangement until the owner threw them a curve (in tax language, a tax cut). Since you are all such good customers, the owner said, I’m going to reduce the cost of your daily meal by $20. So now dinner for the ten only cost $80. The group still wanted to pay their bill the way Americans pay their taxes. So the first four men were unaffected. They would still eat for free. But what about the other six – the paying customers? How could they divvy up the $20 windfall so that everyone would get his fair share?
“The six men realized that $20 divided by six is $3.33. But if they subtracted that from the share of the six who were paying the bill, then the fifth and sixth men would end up being paid to eat their meal! The restaurant owner suggested that it would be fairer to reduce each man’s bill by roughly the same share as their previous portion of the total bill. Thus, the fifth man would now pay nothing; the sixth would pay $2; the seventh would pay $5; the eighth would pay $9; the ninth would pay $12; and the 10th man would pay $52 instead of his original $59. Each of the six men was better off than before and the first four continued to eat for free.
“But once outside the restaurant, the men began to compare their savings. “I only got $1 out of the $20,’ declared the sixth man. “But the 10th man saved $7!’ “Yeah, that’s right!’ exclaimed the fifth man. “I only saved $1, too. It’s unfair that he got seven times more than me.’ “That’s true!’ shouted the seventh man. “Why should he get $7 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. The system exploits the poor!’
“The nine men surrounded the 10th and beat him up. The next night, the 10th man did not show up for dinner, so the other nine sat down and ate without him. But when it came time to pay the bill, they discovered what was very important. They were $52 short of paying the bill.
“And that, boys and girls, journalists and college instructors, pundits and members of Congress, is how the tax system works. The people who pay the highest taxes get the most benefit from a tax reduction.”
As I read Dr. Gibson’s letter, I was reminded of Ayn Rand’s, “Atlas Shrugged.” When America’s most creative and entrepreneurial business leaders were vilified as money-hungry elitists, they withdrew their talent from the national economy and watched it collapse as their politically correct replacements mismanaged the nation’s resources.
It is fun to rail against those who are better off until we no longer have the benefits that accrue from the talents that enabled them to become better off.
So maybe President Bush’s economic package and tax plan are not so crazy, after all.
M. Ross Boyle
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