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    Bar Stool Economics

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    sunnysideup

    Posts : 398

    Bar Stool Economics

    Post by sunnysideup on Wed Jan 26, 2011 12:19 am

    Bar Stool Economics

    Taxes explained with beer.

    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 1st four men (the poorest) would pay nothing.

    The 5th would pay $1.

    The 6th would pay $3.

    The 7th would pay $7.

    The 8th would pay $12.

    The 9th would pay $18.

    The 10th man (the richest) would pay $59.


    So, that's what they decided to do. The ten 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. '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, and he proceeded to work out the amounts each should pay.


    And so the 5th man, like the first four, now paid nothing (100% savings).

    The 6th now paid $2 instead of $3 (33%savings).

    The 7th now paid $5 instead of $7 (28%savings).

    The 8th now paid $9 instead of $12 (25% savings).

    The 9th now paid $14 instead of $18 (22% savings).

    The 10th 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 one dollar out of the $20,' declared the 6th man.


    He pointed to the 10th man,' but he got $10! ''Yeah, that's right,' exclaimed the 5th man.


    'I only saved a dollar, too. It's unfair he got ten times more than I!



    'That's true!!' shouted the 7th 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 9 men surrounded the 10th and beat him up. The next night the 10th man (the richest) didn't show up for drinks, so the 9 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! The richest man had been paying for more than all the rest combined.


    And that, boys and girls, journalists and college professors, liberals and socialists everywhere, 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 where the atmosphere is somewhat friendlier. For those who understand, no explanation is needed. For those who do not understand, no explanation is possible.


    END
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    Lee

    Posts : 104

    Re: Bar Stool Economics

    Post by Lee on Wed Jan 26, 2011 10:58 am

    Well when ya look at it that way :scratch: I guess it kinda makes sense but I need another coffee and a re-read :study:

    Good one Sunny.

      Current date/time is Thu Jun 29, 2017 5:23 am