The first four men (the poorest) pay nothing.
The fifth pays $1.00.
The sixth pays $3.00.
The seventh pays $7.00.
The eighth pays $12.00
The ninth would pay $18.00, and the tenth (the richest)
would pay $59.00.
The ten men ate dinner at this same restaurant and were quite happy with the payment plan, until one day, the owner changed the math. Being such good customers, he said, "I'm going to reduce the cost of your daily meal by $20.00. This lowered the cost of the meal to only $80.00, but the group still wanted to pay the bill the way we pay our taxes.
The first four men were unaffected, as they would still eat for free. But the six paying customers realized that if they simply divided the $20.00 windfall evenly that each would subtract $3.33 from their share. But this would mean that the fifth and sixth man would end up being paid to eat their meal.
They decided to reduce their bill in a similar percentage as what they had been paying, and so:
The fifth man (like the first four) now paid nothing ( a 100% savings).
The sixth man now paid $2.00 instead of $3.00 (a 33% savings).
The seventh man now paid $5.00 instead of $7.00 ( a 28% savings).
The eighth now paid $9.00 instead of $12.00 ( a 25% savings).
The ninth man now paid $14.00 instead of $18.00 ( a 22% savings).
The tenth and richest man now paid almost $50.00 instead of $59.00 ( a 16% savings).
Each of the six "paying" customers was better off than before, and the first four and the fifth were happy with their "free meals," yet the "payers" began to argue about their savings.
"I only got $1.00 out of the $20.00," said the sixth man, while pointing to the tenth man - "but he got $10.00."
"Yes, that's right," exploded the fifth man. "I only saved a dollar, too - it's unfair that he saved ten times more than me."
"That's right," said the seventh man. "Why should he get $10 off, when I only get $2.00? The wealthy get all the breaks!"
"Wait just a minute," screamed the first four men. "We didn't get anything at all. The new system clearly exploited the poor!"
The next night, to avoid an ugly scene, the tenth man didn't come to dinner, so the other nine sat down and ate without him. But when the $80.00 bill arrived, they suddenly realized that they didn't have enough money together to pay even half the bill!
Washing dishes didn't agree with the first four men that had been eating for free, and the idea of changing their eating habits did not agree with the others. So, while the remaining original five paying men kept the restaurant owner "busy" with their pleads for a new deal, the other four robbed the "till" and took the food from the kitchen and drank all of the alcohol and beer from behind the bar.
The "tax moral" of the story is simple. The people who pay the highest taxes should also get the biggest benefit from a tax reduction. Tax them too much, or attack them for merely being wealthy, and they may just not show up to dinner anymore, or they may leave the country! There are plenty of good restaurants around the world.