Wednesday, December 5, 2012

A short lesson in economics, taxation, politics and human nature, all wrapped up into one nice package:

Suppose that every day, ten men go out for a 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 $1.00. 
The sixth would pay $3.00.
The seventh would pay $7.00. 
The eighth would pay $12.00 
The ninth would pay $18.00. 
The tenth man (the richest) would pay $59.00. 

So that’s what they decided to do. The men drank in the bar everyday 
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 $20.00. 
Drinks for the ten men now cost just $80.00.”

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 their fair share? 
They realized that $ 20.00 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 

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,” 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 then 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! 

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.

1 comment:

  1. Quite a few have already started drinking overseas. Many of them had already left because, when they stepped out of the bar the last time they were there, a thug from the EPA pulled them over and fined them because their car exhaust wasn't clean enough, and the Dept of Labor fined them because they hadn't hired a minority to drive the car for them, and the unions burned their house down because it wasn't a union shop.