The Dinner Lesson (the free lunch)

irs.jpgWith taxes being due today you have probably heard a lot of political squabbling about tax reform and our need for an “equitable” tax system.  This issue has been seriously mis-represented and the majority of people have relied on the mainstream media and come to believe certain things about the burden of taxes in this country that has little to do with reality.

I have heard this story below a number of times on the radio, broadcast email, forwards, etc.  It is a story about 10 men who had dinner together every week and settled the bill according to the structure of the “tax system” in this country.

This story of the dinner is obviously fictitious, but the analogy is accurate. Some have attributed the unconfirmed authorship to Don Dodson of Ft. Worth TX in a letter to the editor of the Chicago Tribune in March of 2001 but the earliest distribution that I have been able to find is by T. Davies, Professor of Accounting at the University of South Dakota School of Business who has personally disclaimed authorship but acknowledges distributing it to his graduate students to stimulate discussion.  You may have heard this before but it is still both good and timely.

It seemed that 10 men decided to have a business lunch once a week. They always met in the same restaurant and the bill was always, $100.00, for all 10 men. If each man was responsible for his share of the bill that would be, $10.00, each. The men decided to divide the bill based upon their ability to pay (using the progressive structure of the tax code). Using this formula the following payment arrangement was worked out based upon income.

Men 1-4 who made the least amount of money paid nothing.

Man 5 paid $ 1.00

Man 6 paid $ 3.00

Man 7 paid $ 7.00

Man 8 paid $12.00

Man 9 paid $18.00

Man 10 paid $59.00

After several weeks the owner of the restaurant told the men that because they were such good customers he was reducing the bill by $20.00. Their dilemma was how to divide up the, $20.00. If each person got the same amount then the first 4 men would be getting money back but they never paid anything for the dinners.  After much discussion and no resolve the owner offered the following suggestion which they all agreed to.

Original Payment-New Payment-$ Amount Saved-% Saved

Men 1-4 paid $ 0.00 $ 0.00 $0.00 0%

Man 5 paid $ 1.00 $ 0.00 $1.00 100%

Man 6 paid $ 3.00 $ 2.00 $1.00 33%

Man 7 paid $ 7.00 $ 5.00 $2.00 28%

Man 8 paid $12.00 $ 9.00 $3.00 25%

Man 9 paid $18.00 $14.00 $4.00 22%

Man 10 paid $59.00 $50.00 $9.00 15%

Once outside the men began to argue about the settlement. Man 5 said he only got, $1.00, while Man 10 received, $9.00. Men 1-4 were upset because the received nothing. They said that the cut only benefited the rich and the poor got nothing. They were upset so they beat up Man 10 and left him. The next week they met for lunch as usual except man 10 did not show up. When the new bill arrived the men discovered that between them they did not have enough money to pay even half of the bill.

In this story we see a simplified version of the Federal Income Tax. According to an article in the “New York Times” 80% of the taxes are paid by 20% of the people highest income people. Any time you have a tax cut the people who are carrying the tax burden are going to get the money. The next time you hear of a tax cut and the media tells you that the wealthy are getting all the money, remember they are the ones paying the taxes. 

One epitaph to the story has it where the tenth man moved overseas and took his dinning purchasing there. . . . . . . . . . . . . .

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17 Responses to “The Dinner Lesson (the free lunch)”


  1. 3 meridith April 16, 2007 at 10:19 pm

    welcome to the blog world!

  2. 4 wytammic April 16, 2007 at 11:55 pm

    Hey — welcome to the blogosphere! Thanks for the blogroll. I think the current tax system makes about as much sense as your 10 guys sharing the lunch tab. Great analogy.

  3. 5 shannon April 17, 2007 at 2:30 am

    I get so tired of hearing about tax cuts only benefiting the rich. Thanks for the lunch analagy.

  4. 6 Heidi Jo April 17, 2007 at 1:34 pm

    i’ve heard this before, i think my husband tried to re-tell it. but he’s an engineer and storytelling isn’t usually a personality characteristic of engineers. so it got botched, big time.

    love it though. why is it so clear to some….?

    any thoughts on this abstinence study commissioned by congress that is showing initially no connection between abstinence curriculum and a lower rate of pre-marital sex?

    i’m sure i don’t have all that right, but i was reading about it and thought, “oh here we go, another thing the libs are going to bang george over the head with!”

  5. 7 Eddy April 17, 2007 at 3:13 pm

    Steve Im so glad to see that your taking your thoughts to the blog format. Its about time. Email is “so 2005″… Keep exposing the truth.

  6. 8 stevereenie April 17, 2007 at 3:22 pm

    I have heard the results but haven’t evaluated the report or the process of compiling it, but if the way the Congress handled the 911 investigation with Sandy Bergers destruction of incriminatory evidence for the Clinton administration I am inclined to reserve my judgment as to the accuracy of its conclusions.

  7. 9 Heidi Jo April 17, 2007 at 4:18 pm

    spoken like a true wise man. i like to jump to conclusions quickly because, well i’m a woman…:-)

  8. 10 Jeff Cannell April 17, 2007 at 7:46 pm

    welcome to the world of blogdom daddy!!

  9. 11 Neil April 19, 2007 at 10:05 pm

    I love that story. When 50.1% of the population realizes they can tax 49.9% of the population into oblivion, it will always happen.

    Hope you don’t mind, but I’d like to link to this one.

  10. 12 stevereenie April 24, 2007 at 4:30 pm

    Neil,

    You are welcome to link and thank you.

    stevereenie ……… Next Stop Lauderdale

  11. 13 theobromophile April 25, 2007 at 12:47 pm

    AWESOME post! I saw Neil’s link to it and really like it.

    From each/to each is communism, which doesn’t work. Anyone who has read Atlas Shrugged knows that the rich may decide to stop playing one day, and screw the rest of the country who has been free-loading.

  12. 14 stevereenie April 27, 2007 at 1:18 am

    theobromophile

    Thanks for the comment. That each to each stuff, didn’t the Pilgrims try that and all almost die of famine? I think, as the story goes, they implemented Capitalism he next year and everyone prospered. I wasn’t there so I don’t know for sure.

  13. 15 theobromophile April 27, 2007 at 2:53 pm

    Steve,

    I’m from Massachusetts but didn’t hear about that… then again, implementing capitalism as a means of survival isn’t very PC, so I wouldn’t be surprised if it were not taught. 😉

    I’ll defer to you on that one.


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