W unveiled his plan to jumpstart the economy this week.

According to Associated Press, the economic package's first-year cost of $102 billion would equal about 1 percent of the country's $10 trillion annual gross domestic product. That is within the range of what most economists say is needed to stimulate the economy.

The most costly part of the plan is the elimination of taxes on stock dividends. That should play well with almost 100 million Americans who invest in the stock market.

Also, stock dividends already are taxed as income, so to tax them again as dividends seems patently unfair.

For the middle class, W proposed to increase child tax credits, reduce the tax penalty paid by some married couples and expand the creation of a 10 percent tax bracket.

Those items make up about a third of the overall plan's price tag.

The maximum child tax credit would increase from $600 to $1,000 per child, with the difference sent to taxpayers in the form of a rebate. Eligibility is based on income, with the program phased out after a $110,000 annual salary.

W also supports an extension in unemployment benefits and asked Congress to send $4 billion to states and create "re-employment accounts." That would allow people whose unemployment benefits have ended to get up to $3,000 to help them find a job.

The plan offers few direct business breaks, though small companies would be able to write off more equipment expenses.

Nonetheless, we get the traditional hue and cry from the Democrats who claim it's all a sop to the rich.

John Kerry, the Senator from Massachusetts, who happens to be running for president in 2004, said, "He's speaking the rhetoric working Americans are so eager to hear, but offering only words to distract from his big new tax breaks for the wealthiest Americans."

W is calling for lots of cash to be infused into the economy in the hopes it will spur spending by consumers.

If consumers spend more, factories make more. If factories make more, they hire more.

If more people are working, more people have money to spend. And if more people are working, more people are paying taxes.

Many times in history a tax cut has been followed by an increase in tax revenue to the treasury.

It's a pretty simple concept, and it doesn't really matter whether the consumer is a rich person or a poor person.

The bottom line is that a robust economy is good for everyone regardless of status. And it's good for the government because there's more income to be taxed.

And if the government can contain spending, which is a huge if, deficits can shrink.

But the whole idea that tax cuts are aimed at the rich is really tired.

What the Democrats say is true. The rich do benefit more from tax cuts. But they always leave out a very important piece of the argument.

The rich pay the most taxes.

It only follows logically that if you apply a tax fairly, the rich will get a bigger break. It's another pretty simple concept.

One of our readers gave me an item he found on the Internet. I think it is a pretty good analogy of how the U.S. tax system works.

Here goes:

Suppose that each day 10 men go to a restaurant for dinner. The bill for all 10 comes to $100. If the bill was paid based on the relative wealth of the men, the way we pay income taxes, it would go like this.

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; and the 10th, the richest man, would pay $59.

The 10 men continued to eat dinner and were quite satisfied with the arrangement until one day the restaurant owner threw them a curve.

He told them since they were such good customers, he was reducing their total bill to $80.

The first four men are unaffected because they pay nothing, but a debate arose over how to divvy up the $20 savings.

They could divide the $20 evenly between the remaining six, giving each one $3.33. But that would mean the fifth and sixth man would be paid to eat, because they each already paid less then $3 for their meal.

The restaurant owner suggested that they reduce each man's bill by an amount proportionate to what he paid. Under that plan, the fifth man would pay nothing (just like the first four), and the sixth man would pay $2 instead of $3. The seventh would pay $5 instead of $7. The eighth would pay $9 instead of $12 and the ninth would pay $12 instead of $18. the 10th man would wind up with a bill of $52 instead of $59.

Outside the restaurant, the men began to compare their savings.

"I only got a dollar out of a $20- dollar reduction," complained the sixth man, pointing to the 10th, "and he got $7."

"Yeah," exclaimed the fifth man. "I only saved a dollar, too. It's not fair that he got seven times more than we did."

"That's true," shouted the seventh man. "Why should he get $7 when I only got $2?"

"Wait a minute," the first four men yelled in unison. "We didn't get anything out of this. This price reduction exploits the poor!"

The argument became more heated and the nine men surrounded the 10th and beat him up.

The next night, he didn't show up for dinner at all, so the other nine sat down for dinner without him. When they got the bill, they discovered something very significant. They were short $52.

That's how the U.S. tax system works. The people who pay the most taxes get the most benefit from a tax cut.

The Democrats need to be careful about setting up a class war over taxes.

If you tax the rich too much or attack them for being wealthy, they'll shelter income. They'll hoard capital instead of investing it. There will be no incentive for them to expand their enterprises.

They'll give up their seat at the table.

And who do you suppose will be left holding the bill? [[In-content Ad]]