How Taxes Really Work

how taxes work restaurant analogyThe following story has been circulating around the Internet since 2001, but it is always a humorous read (and will get you thinking a bit) as people start to put their taxes together so I thought I’d place it up for some that may have missed it:

This is a VERY simple way to understand the tax laws. Read on — it does make you think!!

Let’s put tax cuts in terms everyone can understand. Suppose that every day, ten men go out for dinner. 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 sev


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6 Responses to How Taxes Really Work

  1. pfadvice says:

    Yes, that is where I linked “author is unknown”

  2. Erik says:

    No, this isn’t how it would work. When the tax reduction is put into play, it would be as a “credit” which would pay the first four $3 each, the fifth and sixth $2 and the seventh, eighth and nighth $1.33 each, and the tenth would receive no more HOWEVER… due to the increased paperwork, the tenth would have to pay his tax accountant more so he ends up loosing anyway.

  3. Tom says:

    Actually, if we’re really modeling the tax system, the richest guy, while paying $59 of the original check, has a guy whose only job is to find each and every coupon and deal the restaurant offers and gets a large chunk of the money right back. The second and third richest guys don’t have a guy to find _all_ the coupons, but they can find a few, reducing their cost somewhat. The coupons don’t help the rest of the guys, as all the coupons are of the form “take X off your portion of the bill that is greater than $5”.

  4. twins15 says:

    Interesting stuff!

  5. Pingback: links for 2007-01-18 » Whatever’s Interesting

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