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MONDAY, APRIL 7, 2008 (8:17 PM)

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Bar Stool Economics

(I'm feeling amused)

(By the way, I'm not one of the first 4 men, but I'm no where close to the 10th man. I thank God everyday for rich people. They're the only ones hiring!)

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 t he 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.

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

David R. Kamerschen, Ph.D.
Professor of Economics
University of Georgia

Category: Life

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Posted May 24, 08 by urnow (

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The prob. w/that reason d'ete is that the rich write off everything, get the taxpayers to foot their corporate loses, and pay virtually nothing leaveing the remainder of the tax curve to pay for everything...and have insufficient ways or income to write anything off....they shoulder the ENTIRE burden! (Also the wealthy can have add'l int'l holdings set up to remove their profits from both scrutiny & taxation)

Posted Apr 20, 08 by TLDavis
I like this. It is shocking how few people actually consider the method by which we fund this nation. I get tired of hearing everyone jump on the rich people as if being rich is unethical. As always, it is how one chooses to use their wealth that determines what sort of person they are. The mere act of paying taxes in this case is the act of providing for the less fortunate.

TL

Posted Apr 10, 08 by Jacksons2cents (

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I have heard this before...and I still love it. Glad I drink at home. Well...until I go to Vegas next week. Walk that 3 miles from Balley's to the Winn...

Posted Apr 8, 08 by B4Salk (

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I'm glad I seldom drink beer...