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Understanding how we pay taxes

sw

Well-known member
Pay attention libs.



Bar Stool Economics or Understanding our Tax System



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 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 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, 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.

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
 

Goodpasture

Well-known member
What this is, despite the platitudes, is a failure to understand taxes and how and why they are paid. It is based on some erroneous assumptions. First, it assumes the rich guy is going to sit at the same table as the rest of the guys. Second it assumes that it the rich guy is going to be willing to accept the same service as the poor guy. Third, it assumes the rich guy is going to drink the same beer as the poor guy. All assumptions are wrong.
 

Goodpasture

Well-known member
No he doesn't.

The poor guy drives to and from work.

The rich guy ships his goods over the public roadways in his fleet of trucks.

the poor guy drives to work in an old pickup

The rich guy has his chauffeur pick hip up and drop him off in his limousine at his private entrance.
 

Goodpasture

Well-known member
Platitudes are no substitute for either wisdom or understanding. They are, however, a refuge for those weak minded individuals who are capable of neither wisdom nor understanding.
 

cutterone

Well-known member
now here's the rest of the story...

The #1 - #4 had to share a pitcher of 50 cent beer and shared it with other patrons in the bar.

#5 - #7 drank $1 beer and had to carry all the beers and food to the table

#8 - #9 kissed up to #10 and paid the tip

#10 drank the more expensive draft, had hot wings, and told #1 - #4 to clean up the mess
 

Steve

Well-known member
Goodpasture said:
Platitudes are no substitute for either wisdom or understanding. They are, however, a refuge for those weak minded individuals who are capable of neither wisdom nor understanding.

Is that why you use them all the time?
 

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