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Amanda Martin-Shaver

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Our Tax System Explained: Bar Stool Economics
10/23/2008 5:23:52 AM
Sharing this article that came my way..
Amanda

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 got' '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



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Re: Our Tax System Explained: Bar Stool Economics
10/23/2008 7:07:56 AM

Good morning Amanda, very good post. I saw this on another site a few days ago and I think it might be appropriate to post here.

Do you know how to catch wild pigs? You catch wild pigs by
finding a suitable place in the woods and putting corn on the
ground. The pigs find it and begin to come everyday to eat
the free corn. When they are used to coming every day, you
put a fence down one side of the place where they are used
to coming. When they get used to the fence, they begin to
eat the corn again and you put up another side of the fence.
They get used to that and start to eat again. You continue
until you have all four sides of the fence up with a gate in
the last side. The pigs, who are used to the free corn, start
to come through the gate to eat, you slam the gate on them
and catch the whole herd.  Suddenly the wild pigs have lost
their freedom. They run around and around inside the fence,
but they are caught. Soon they go back to eating the free
corn. They are so used to it that they have forgotten how
to forage in the woods for themselves, so they accept their
captivity.

That is exactly what is happening to America. The government
keeps pushing us toward socialism and keeps spreading the free
corn out in the form of programs such as supplemental income,
tax credit for unearned income, tobacco subsidies, dairy
subsidies, payments not to plant crops (CRP), welfare, medicine,
drugs, etc. While we continually lose our freedoms - just a little
at a time.

One should always remember: There is no such thing as a free
lunch! Also, a politician will never provide a service for you
cheaper than you can do it yourself. Do you see that all of
this wonderful government 'help' is a problem confronting the
future of democracy in America? Do you think the free ride
is essential to your way of life? Then God help you when the
gate slams shut!

In this 'very important' election year, listen closely to what
the candidates are promising you! 

"A government big enough to give you everything you want,
is big enough to take away everything you have." -
Thomas Jefferson
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Joe
Joe Downing

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Re: Our Tax System Explained: Bar Stool Economics
10/23/2008 7:15:03 AM

"A government big enough to give you everything you want,
is big enough to take away everything you have." -
Thomas Jefferson


Very important quote and thank you Mary and Amanda!  That man was so wise, it is too bad he hasn't been studied in the schools for the past 30 years.

Hugs,

Joe

***ADLAND BULLETIN BOARD*** What is Xtreme X2O? ###Get some X2O and Jerky RADICAL for the TRUTH! Laus Deo! ** HUG DEPARTMENT: Always OPE
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Amanda Martin-Shaver

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Re: Our Tax System Explained: Bar Stool Economics
10/23/2008 7:41:00 AM
Hi Evelyn,

Thanks for sharing this article.  I have read this also and this is very sound
advice, that we should all be aware of.  One has to work for their living and
not expect hand outs or take them longer than your necessity or you can be
trapped into not being able to fend for yourself.

Teach a man to fish and he will have food for life.  Give a man a fish and he
will only have one or two meals....Then what happens to this man after he
has eaten his fish?....He does not know how to go and catch his own!


Amanda

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Amanda Martin-Shaver

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Re: Our Tax System Explained: Bar Stool Economics
10/23/2008 7:43:41 AM
Hi Joe,

I agree, Thomas Jefferson and many others before our time had some very
good advice to pass on to the next generations that are timeless.


Amanda
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