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| Name: |
gabby
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| Subject: |
Bar Stool Economics
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Date:
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10/20/2008 12:32:37 PM
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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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| Name: |
AUCATZ
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| Subject: |
Exactly!
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Date:
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10/20/2008 2:19:05 PM
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Business has moved operations out of the US because (1) cheaper labor, and (2) less taxes. More taxes on 'those evil rich businessmen' will not create more jobs, it will cause any business that can afford to go overseas to do so.
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| Name: |
MartiniMan
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| Subject: |
On Point
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Date:
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10/20/2008 2:55:44 PM
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This post is so very true. What liberals will argue is that the 10th guy will always be there while the lesson from history is in fact he will not. No explanation will suffice for GF or Tallulah I can assure you....
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| Name: |
water_watcher
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| Subject: |
Bar Stool Economics
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Date:
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10/20/2008 3:15:49 PM
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This has been around for a while and it is excellent. The sad part is the liberals just don't get it. They look at the dollar tax cut and say it is unfair when it has always been the smallest percentage and they ignore the fact that the wealthiest already pay the highest percent of taxes.
Just like businesses that are over taxed, they ship the jobs overseas and some have even incorporated in other countries to avoid the over taxation so they can compete in the world economy. The same choice exists for wealthy individuals. Stick it to them, over tax them and they will find a way to shelter their income from the government.
That is why socialism has never worked. There needs to be incentives to do well, grow and create jobs. From that tax revenues increase. Tax increases have historically resulted in lower tax revenues, not higher. Tax cuts that stimulate the economy have resulted in higher tax revenues.
Look at cities like Chicago that have "all democratic" leadership. High sales taxes, high property taxes, a city tax .... yet one of the worst in developmental education, one of the highest crime rates, corruption in government, big unions, one of the highest percentage of poor, high unempolyment and a city budget that is close to bankruptcy and looking for a bailout.
But they now have so many people that rely upon the government to take care of them, they keep voting in the democrats. Wasn't it Einstien that said the true definition of crazy is to keep doing the same thing over and over expecting a different result.
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| Name: |
GoneFishin
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| Subject: |
Waterman
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Date:
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10/20/2008 3:44:49 PM
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It has been rather surreal without your input the last few days. All of us Socialist Marxist Liberal do nothings welcome you and your input back to the forum. We hope you are rested after that long trip to Korea.
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| Name: |
SPEARFISHER
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| Subject: |
WTF
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Date:
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10/20/2008 5:22:22 PM
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What a great comeback!! WHATEVER!!
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