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Beer drinking tax analogy

elimin8r900 Jan 18, 2011

  1. elimin8r900

    elimin8r900 Supporting Member

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    Got this via email from a buddy. Liked it so much I thought I'd share it here.

    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!" "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
     
  2. klx678

    klx678 Well-Known Member

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    Just remember, the hard core conservative is the one spreading this message - and is the bar owner in the analogy. They just try to keep all of us, who don't fit in with their country club ways, fighting amongst ourselves by drumming up that crap.

    There is no way to associate the taxation and well being of a nation using such a simple tale. The tale actually sounds more like the health insurance, oil, and banking interests arguing over how much they milk us both as consumers and tax payers. That's probably what politicians hear from the lobbyists. "AIG went broke and you gave them more money than us!" "What do you mean you want us to loan more money out to consumers and small businesses! We need more bonus money!" "Spill? What spill? Ah, let the tax payers clean it up while we raise prices for more profits. Record profits? Those weren't record profits, just wait till the end of this year!"

    Face it, the biggest welfare cases are business and industrial in nature, not the citizens. Otherwise how do you explain all the grants and breaks given to oil, agriculture, banks, and the rest? Yet a guy (my friend) with wasted ankles and knees after 40 years as a plumber, going blind due to cataracts so he can't drive can't get any sort of disability? He's paid in for forty stinking years and is 57, no way he can find a decent job, but can't get a break.

    Then there is this from nine-term Rep. Steven LaTourette, R-Ohio, he said tea party newcomers who are eager to slash federal spending will soon learn how difficult it is.

    "Back in Ohio, almost everybody says, 'Oh, you've got to cut spending,'" LaTourette said. "But then they say, 'Oh, I didn't know you meant my spending.' "

    My guess is you might say the same thing if you find the cutting starts making it hard for you, maybe even cost your job... and #5 and 6 in your story don't give a hoot about you, as long as they can screw everyone for as much as they can get. Fact is though, that there are a lot of relatively rich people who ARE willing to pay more. They realize that "$59 beer" they can afford and that #1 and 2 are likely trying to figure out how to survive, stay warm, and get a couple meals a day. Maybe you don't care. I don't know. I do. As long as I'm working I'm happy to pay some forward through some tax programs, especially at the state levels. I want my state to do well.


    By the way, I saw this tax analogy written elsewhere. It was pointed out by Snopes that David Kamerschen didn't write that.
     
    Last edited: Jan 18, 2011
  3. elimin8r900

    elimin8r900 Supporting Member

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    The bar owner gave 'em 10% off, he's not the bad guy. The message is about the patrons and its analogy to taxes is relevant. In the US the top 5% of income tax payers provide 50% of the tax revenue. Hence, the question the analogy poses is, "How much burden should the minority expect the majority to bear?".

    This wasn't posted for us to fight amongst ourselves, just to read, and possibly discuss.

    The email I received credited Mr. Kamerschen, so I left that in. I should have Snoped it first, thanks for the correction.
     
  4. Bozang1

    Bozang1 Well-Known Member

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    it's working, beer and politics don't mix, let the fighting begin! :occasion14::occasion14::occasion14::pain10::pain10::violent1::pottytrain2::rr:::nono::rotf::3some::thebirdman:

    The above represents typical behavior, The fighting, more beer (threesome going on somewhere else, and a big F U in the end. hahahahha
     

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