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Iambjm

Our Tax System Explained: Bar Stool Economics

11 posts in this topic

I got this in an email today and actually got quite a chuckle out of it.

Our Tax System Explained: Bar Stool Economics

Suppose that every day, ten men go out for beer and 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 seventh would pay $7.

> The eighth would pay $12.

> The ninth would pay $18.

> The tenth man (the richest) would pay $59.

So, that's what they decided to do.

The ten men drank in the bar every day and seemed quite happy with the arrangement, until one day, the owner threw them a curve. 'Since you are all such good customers,' he said, 'I'm going to reduce the cost of your daily beer by $20.' Drinks for the ten now cost just $80.

The group still wanted to pay their bill the way we pay our taxes so the first four men were unaffected. They would still drink for free.

But what about the other six men - the paying customers? How could they divide the $20 windfall so that everyone would get his 'fair share?' They realized that $20 divided by six is $3.33. But if they subtracted that from everybody's share, then the fifth man and the sixth man would each end up being paid to drink his beer.

So, the bar owner suggested that it would be fair to reduce each man's bill by roughly the same amount, and he proceeded to work out the amounts each should pay.

And so:

> The fifth man, like the first four, now paid nothing (100% savings).

> The sixth now paid $2 instead of $3 (33%savings).

> The seventh now pay $5 instead of $7 (28%savings).

> The eighth now paid $9 instead of $12 (25% savings).

> The ninth now paid $14 instead of $18 (22% savings).

> The tenth now paid $49 instead of $59 (16% savings).

>

> Each of the six was better off than before. And the first four continued to drink for free. But once outside the restaurant, the men began to compare their savings.

> 'I only got a dollar out of the $20,'declared the sixth man. He pointed to the tenth man,' but he got $10!' 'Yeah, that's right,' exclaimed the fifth man. 'I only saved a dollar, too.

> It's unfair that he got ten times more than I got' 'That's true!!' shouted the seventh man. 'Why should he get $10 back when I got only two? 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 tenth and beat him up.

> The next night the tenth man didn't show up for drinks so the nine sat down and had beers without him. But when it came time to pay the bill, they discovered something important. They didn't have enough money between all of them for even half of the bill!

> And that, ladies and gentlemen, journalists and college professors, is how our tax system works. The people who pay the highest taxes get the most benefit from a tax reduction. Tax them too much, attack them for being wealthy, and they just may not show up anymore. In fact, they might start drinking overseas where the atmosphere is somewhat friendlier.

>

> David R. Kamerschen, Ph.D.

> Professor of Economics University of Georgia For those who understand, no explanation is needed.

> For those who do not understand, no explanation is possible.

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hm...what happend if some of the poor moved to the middle?...or maybe they can just drink less....

lol...can't wait till sandman sees this thread -_-

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If their Heart is Overseas with their Bank Accounts, send those Anti-Americans off with Fireworks...and don't come back... cry

The Wealthy will always Show Up...to Collect their Millions and Billions...just as The Welfare will Show Up to Collect their Thousands...and you and I will continue to Fund them Both... blush

Paying a Few Percent More will not cause any Significant Flight of The Bumble Bees...there will always be more Honey to Raid... shocked

That Tired Old Empty Threat has Long Outworn it's Welcome...

Sounds like the Wealthy Old Professor put this together on a Bar Stool...or After He Fell Off...

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I fully agree with this theory but you are not taking into account the Robin Hood of Chicago who is now going to rob more from the rich and give to the poor! LOL

Windy

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I fully agree with this theory but you are not taking into account the Robin Hood of Chicago who is now going to rob more from the rich and give to the poor! LOL

Windy

I'm sure He will leave them enough for Cake and Perrier...Remember, Barak is in the top 3%...and even as Pres will make $450,000 or Better...and Michelle is making Good Bucks Too...

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> David R. Kamerschen, Ph.D.

> Professor of Economics University of Georgia For those who understand, no explanation is needed.

> For those who do not understand, no explanation is possible.

Prefessor Kamerschen didn't write it.

Some truth to how this works out, but it is also key to remember that the 'beer' is given to the bar owner to stimulate the drinking from a 'magical' well by barley fairies (the government) and the top 10% are drunkards and drink far more than anyone else and think they are entitled to drink far more than everyone because they are the life of the party.

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This has been posted on here several times and I have posted this before but I will again as a little food for thought.

Interestingly enough if you took this analogy one step further and allocated the $100 the same way wealth is distributed it would go something like this(and using the dinner bill):

The first four men(the poorest)would have $0.20 (or 5 cents each. They would each get to keep their 5 cents).

The next two would have $3.80 (or $1.90 each. Together they would not have enough to cover their portion of the bill. They would be about 20 cents short (Hey, maybe the poor guys could give them their $0.20, they didn't pay anything anyways.) Seperately the fifth guy would be able to cover his bill and have 90 cents left for some Tic Tacs. The sixth guy would be $1.10 short

The seventh and eighth would have $11.30 (or $5.65 each not enough to cover their share of the bill)

The ninth would have $13.40 (wouldn't have enough to cover his end of the bill either)

The tenth(the richest man) would have $71.00 (he would cover his bill and have $12 left)

I think this is probably a good illustration of how the middle is getting the shaft (not the poor and not the wealthy).

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Originally Posted By: Iambjm
> David R. Kamerschen, Ph.D.

> Professor of Economics University of Georgia For those who understand, no explanation is needed.

> For those who do not understand, no explanation is possible.

Prefessor Kamerschen didn't write it.

Some truth to how this works out, but it is also key to remember that the 'beer' is given to the bar owner to stimulate the drinking from a 'magical' well by barley fairies (the government) and the top 10% are drunkards and drink far more than anyone else and think they are entitled to drink far more than everyone because they are the life of the party.

LOL magical well with barley fairies...Wouldn't you just love that? laugh

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LOL magical well with barley fairies...Wouldn't you just love that? laugh

Man, whose platform is that a part of? Makes me want to vote again RIGHT NOW! gringrin

Nice to see a thread that's got people chuckling instead of the usual whining, negativity and discontent in here. smilesmilesmile

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