Does this sound familiar?
THE SIMPLIFIED EXPLANATION OF THE TAX STRUCTURE
Bar Stool Economics
Suppose that every day, ten men go out for a couple of beers and the bill for all ten comes to $100. If they paid their bill the way we pay our taxes according to our current tax structure, 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 on 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 bar bill 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
percentage of total of what he had been paying, 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 in stead 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!"
"That's true!!" shouted the seventh man. "Why should he get $10 back
when I got only two"
"The rich 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 among them all for even
half of the bill!
And that, boys and girls, 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, or
not reinvest in the community.
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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David R. Kamerschen, Ph.D. must teach Economics 101 and not an advanced class. He forgot mention #10 mankept the receiptonce the total bill was paidand gave it to his accountant for a tax write off at the end of theyear so he actually ends up spending nothing!I also figure the rest of themhad enough money to drink, just not enough to give the waitress as big a tip as usual.
# 10 man never tipped, it was not tax deductible.
# 10 man needed the crap beat out of him!
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Hot Shot Manufacturing, Stratton Game Calls.
I googled the title and only found the article on several unremarkable blogs. I used to wonder what made it so difficult for people to verify and properly cite their sources. I'm really starting to get the feeling that it's simply because documenting the truth wouldwholely discredit the messages of the bloggers who do their typing out in left field.
does this sound familiar?
