Allegedly written by a University Professor of economics
Editors note: This is cute but we’d love to hear a rebuttal to this… Anyone?
Our Tax system, explained in terms of beer…
Using actual percentages, the impact of a tax cut, and the public reaction that everyone should be able to understand.
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!’
‘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.
Tax the Rich!?? This is why I'm a Conservative...,
Taboo Jiver
10 Oct 2011Comment shared from Facebook – ” No one “drinks” for free. Every day I’m presented with one false analogy after another.
Also the “wealthy” never up and move overseas they just move jobs.” – Progressive News Network
Mark
10 Oct 2011Great example. Going out for beer. Sounds a little redneck to me. And why does “University of Georgia”, the reddest state of them all (putting the red in redneck), not surprise me any?
CDW
10 Oct 2011No, the reddest State is Utah, Idaho not far behind. What I can’t figure out is why the band at Georgia, “the capital of the South,” plays the Battle Hymn of the Republic after every touchdown?
Frannie G.a.
13 Oct 2011Actually, I don’t think Dr. Kamerschen wrote this piece. If you go to his actual website on UGA’s site it says in the very first paragraph: “Contrary to Internet folklore, Dr. Kamerschen is NOT the author of ‘Tax Cuts: A Simple Lesson in Economics’ or ‘Bar Stool Economics’ or anything similar to that. Additionally, he does NOT know who wrote it and he has no opinion on its merits.”
But if you take a class with him, then he might actually tell you what he thinks. Rather than pissing away your time on the internet getting false information and agreeing with what most professors would call a gross analogy not even close to the truth, maybe you could actually try to learn something by getting a higher education. Just a thought.
Taboo Jiver
13 Oct 2011Well? It could be that he originally wrote it and is now denying it after it’s gone internet viral… or perhaps he didn’t write it at all. In either case, many, many people now think he wrote it because it’s being sent out in e-mail blasts all over the country with his name all over it. But, Frannie, regardless of who wrote it we couldn’t agree more that it’s a ‘gross analogy not even close to the truth’ that much is perfectly clear…but this is exactly the type of shit that the under-educated bite on and believe. Sad.