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Thread: Bar Stool Economics

  1. #1
    Global Moderator Defense Professional JAD_333's Avatar
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    15 Apr 07
    Corpus Christi, Texas

    Bar Stool Economics

    This illustrates how the US tax system works and why the dems constant moaning about the wealthy not paying their fair share makes no sense.

    This is somewhat old, but worth another look in an election year.

    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 b e 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

    For those who understand, no explanation is needed. For those who
    do not understand, no explanation is possible.

    Gotta love the Democrats!
    To be Truly ignorant, Man requires an Education - Plato

  2. #2
    Senior Contributor
    Join Date
    10 Oct 07
    Quote Originally Posted by JAD_333 View Post
    This illustrates how the US tax system works and why the dems constant moaning about the wealthy not paying their fair share makes no sense.

    This is somewhat old, but worth another look in an election year.

    Brilliant story. Going to save this one.

  3. #3
    RLTW!! Military Professional Walking Dead's Avatar
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    11 Jan 08

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