Our tax system explained...

[Mike6176]

This may be the single best explanation of how the tax system works in the US, and the problems with those that demagogue it.



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. He said, "Since you are all such good customers, 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!"

"That's true!!", shouted the seventh man. "Why should he get $10 back when I got only $2? 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 any more. In fact, they might start drinking overseas where the atmosphere is somewhat friendlier.

David R. Kamerschen, Ph.D.

Professor of Economics, University of Georgia

[rankroddin250]

seen that one b4... best way to correct that problem is have em all pay the same amount for their beer at the bar... and dont with hold the beer money out of their pay checks.


I SUPORT THE FAIR TAX!

[kinghawg98]

amen.

quit demonizing "the rich" hard work should be rewarded like it was in years past...now people just b!tch and moan when "its not fair"

[rankroddin250]

the problem I think most people have is with the corprate world we live in. the sad reality is most rich people dont work hard at all. They brown nosed their way to the top colect a HUGE pay check to make a few phone calls and chew a few butts.

while the guy that is actualy working hard is making 10 bucks an hour and trying to figure out which one of his cars to give back to the bank because his family cant aford to eat.

it really has nothing to do with the tax system. people just arent happy with the economy and they have to bich about some one. that just happens to be any one who is more fortunate than them.

[NorCal350]

Hit the nail on the head ....The rich (or well off) get ripped for making too much and then for not spending enough...

[kinghawg98]

That may be your problem/take on the situation, I hear very little about corporations aside from the "evil oil company" (which is crapola)..

if someone is only making 10/hour.....whose fault is that? the person who accepted the job to make 10/hour or the company who offered the job? c'mon, if the person aint happy with 10/hr, do something else, go somewhere else, work to get promoted.

[3ddiver]

if someone is only making 10/hour.....whose fault is that? the person who accepted the job to make 10/hour or the company who offered the job? c'mon, if the person aint happy with 10/hr, do something else, go somewhere else, work to get promoted.



I agrre with you but it isnt always that easy. There are people that have to keep that job so they have income and cannot afford to go to school or quit that job. That being said there are just too many people that think they are owed something because someone else has done better than they have and that is crap.

[kinghawg98]

to be stuck at a wage is nobody's fault but their own. always room for more--thats what America used to be about.

[rankroddin250]

so if you guys idea is correct then we should all be rich and should all be paying the same taxes.

[kinghawg98]

no, because not everyone desires to work as hard as someone else, some are happy with xx/hour. Others choose more. Also not everyone has the same skillset. Some skills are valued more and have been since the beginning of time.

we should pay the same percentage of taxes. not the same dollar amount.