Is this an easy way to explain Obamas tax plan?
Subject: Bar stool economics Suppose that every day, ten men go out for beer and the
bill for all ten comes to 0. 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 .
The sixth would pay .
The seventh would pay .
The eighth would pay .
The ninth would pay .
The tenth man (the richest) would pay .
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
. Drinks for the ten now cost just .
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 windfall so that everyone would get his
‘fair share?’ They realized that divided by six is .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 instead of (33%savings)
The seventh now paid instead of (28%savings) .
The eighth now paid instead of (25% savings).
The ninth now paid instead of (22% savings).
The tenth now paid instead of (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 ,’declared the sixth
man. He pointed to the tenth man,’ but he got !’
‘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 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, 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
Tagged with: bar owner • bar stool • curve • drinks • economics • fair share • four men • six men • sixth man • subject bar • tenth man • windfall
Filed under: Your Community Center
Like this post? Subscribe to my RSS feed and get loads more!
The way things are right now, however – the first 4 people are still showing up at the bar. So is the tenth person. Customers 5 through 9 have lost their jobs, so they can’t come anymore. But the tenth person doesn’t want to pick up the tab for the first 4 all by himself, so he quits coming to the bar. Then the owner of the bar goes out of business. It’s the trickle-down effect, right?
YES.
I think its easier to explain it this way.
If it moves tax it.
If it breaths tax it.
If it dies tax it.
Better than Bush’s tax plan, which is the exact opposite – tax the poor, give to the rich.
Did the 10th man turn from a millionaire into a billionaire because someone ELSE gave him unfair tax breaks?
HAHA that’s so great. i <3 it.
Lol i’m sorry but that is the most ridiculous analogy i’ve ever seen.
1st off if you don’t have money to drink you, ain’t drinking. That’s the reality of that situation.
A poor man 9x out of 10 is drinking because he’s broke in the 1st place. If the bill came to $100.00 that meant each man had 10.00 worth of drinks. AND TRUST me, a poor man who drinks will make sure he has at least 10.00 of drinking money even if it’s his last.
But let’s take this analogy a little further…if the four poor dudes didn’t have enough money to pay for their drinks it’s because they get taxed out the a$$ while the rich guy still has money left over because he is getting a tax reduction. No wonder he is able to pay most of the bill. If we were taxed accordingly. They would all be able to pay their own tab.
We get taxed on how much we make. The simple math is this:
Tax the rich more cause they can afford it. Don’t tax the majority of the population, the middle class, more. They can’t afford it. Hence, our economy is screwed.