The Tax System (explained in beer)
Discussion
This sums up my thoughts perfectly...
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 ball.
"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 men would 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 realised 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 a higher percentage the poorer he was, to follow the principle of the tax system they had been using, and he proceeded to work out the amounts he suggested that each should now pay.
And so the fifth man, like the first four, now paid nothing (100% saving).
The sixth now paid $2 instead of $3 (33% saving).
The seventh now paid $5 instead of $7 (28% saving).
The eighth now paid $9 instead of $12 (25% saving).
The ninth now paid $14 instead of $18 (22% saving).
The tenth now paid $49 instead of $59 (16% saving).
Each of the six was better off than before. And the first four continued to drink for free. But, once outside the bar, the men began to compare their savings.
"I only got a dollar out of the $20 saving," 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 benefit than me!"
"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. This new tax 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 their 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 government ministers, is how our tax system works.
The people who already pay the highest taxes will naturally 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.
For those who understand, no explanation is needed.
For those who do not understand, no explanation is possible.
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 ball.
"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 men would 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 realised 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 a higher percentage the poorer he was, to follow the principle of the tax system they had been using, and he proceeded to work out the amounts he suggested that each should now pay.
And so the fifth man, like the first four, now paid nothing (100% saving).
The sixth now paid $2 instead of $3 (33% saving).
The seventh now paid $5 instead of $7 (28% saving).
The eighth now paid $9 instead of $12 (25% saving).
The ninth now paid $14 instead of $18 (22% saving).
The tenth now paid $49 instead of $59 (16% saving).
Each of the six was better off than before. And the first four continued to drink for free. But, once outside the bar, the men began to compare their savings.
"I only got a dollar out of the $20 saving," 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 benefit than me!"
"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. This new tax 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 their 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 government ministers, is how our tax system works.
The people who already pay the highest taxes will naturally 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.
For those who understand, no explanation is needed.
For those who do not understand, no explanation is possible.
CaptainSlow said:
I think you'll find the tenth man doesn't drink any of the beer but drinks wine elsewhere and pays for that separately. He does however still pay the vast share of the beer bill.
I've seen the above quite a few times but your little add on is perhaps the most pertinent comment I've seen added to it. Right on the money.Asterix said:
CaptainSlow said:
I think you'll find the tenth man doesn't drink any of the beer but drinks wine elsewhere and pays for that separately. He does however still pay the vast share of the beer bill.
I've seen the above quite a few times but your little add on is perhaps the most pertinent comment I've seen added to it. Right on the money.Though I haven't seen tax explained this way before. I really liked the analogy.
If they didn't spend so much time drinking beer they could've worked out that the $20 saving should be split by the percentage that they pay.
5th = $.20 pays $.80
6th = $.60 pays $2.40
7th = $1.40 pays $5.60
8th = $2.40 pays $9.60
9th = $3.60 pays $14.40
10th = $11.80 pays $47.20
Stupid pissheads
5th = $.20 pays $.80
6th = $.60 pays $2.40
7th = $1.40 pays $5.60
8th = $2.40 pays $9.60
9th = $3.60 pays $14.40
10th = $11.80 pays $47.20
Stupid pissheads
TEKNOPUG said:
If they didn't spend so much time drinking beer they could've worked out that the $20 saving should be split by the percentage that they pay.
5th = $.20 pays $.80
6th = $.60 pays $2.40
7th = $1.40 pays $5.60
8th = $2.40 pays $9.60
9th = $3.60 pays $14.40
10th = $11.80 pays $47.20
Stupid pissheads
I'm thinking they should just drink more beer.5th = $.20 pays $.80
6th = $.60 pays $2.40
7th = $1.40 pays $5.60
8th = $2.40 pays $9.60
9th = $3.60 pays $14.40
10th = $11.80 pays $47.20
Stupid pissheads
CaptainSlow said:
TEKNOPUG said:
If they didn't spend so much time drinking beer they could've worked out that the $20 saving should be split by the percentage that they pay.
5th = $.20 pays $.80
6th = $.60 pays $2.40
7th = $1.40 pays $5.60
8th = $2.40 pays $9.60
9th = $3.60 pays $14.40
10th = $11.80 pays $47.20
Stupid pissheads
I'm thinking they should just drink more beer.5th = $.20 pays $.80
6th = $.60 pays $2.40
7th = $1.40 pays $5.60
8th = $2.40 pays $9.60
9th = $3.60 pays $14.40
10th = $11.80 pays $47.20
Stupid pissheads
srebbe64 said:
The tenth person would be in Dubai or Monaco or some such Tax haven and could pay for the other nine to come over and buy them all drinks and still be quids in!
Sorry but tw4t! Why oh fu*king why is it so abhorrent in our society to obtain success and then when you do is there some sort of social imperative to "give back"? I am not say you ought not and should not I am questioning the outrageous situation we have where it is foisted upon you in a format so given by "others".
550Hep said:
srebbe64 said:
The tenth person would be in Dubai or Monaco or some such Tax haven and could pay for the other nine to come over and buy them all drinks and still be quids in!
Sorry but tw4t! Why oh fu*king why is it so abhorrent in our society to obtain success and then when you do is there some sort of social imperative to "give back"? I am not say you ought not and should not I am questioning the outrageous situation we have where it is foisted upon you in a format so given by "others".
Because the wealthy benefit massively from living in a society where everyone is well fed and healthy.
Willie Dee said:
550Hep said:
srebbe64 said:
The tenth person would be in Dubai or Monaco or some such Tax haven and could pay for the other nine to come over and buy them all drinks and still be quids in!
Sorry but tw4t! Why oh fu*king why is it so abhorrent in our society to obtain success and then when you do is there some sort of social imperative to "give back"? I am not say you ought not and should not I am questioning the outrageous situation we have where it is foisted upon you in a format so given by "others".
Because the wealthy benefit massively from living in a society where everyone is well fed and healthy.
Edited by Diderot on Saturday 16th October 09:34
JonRB said:
I very much like this quotation though:
I hate it, it just reeks of arrogance and condescension. I've had it used on me once by somebody who did not want to not to accept my (perfectly valid) needs, only naively and stubbornly accept that he was the only one that could be right. If you want to make yourself sound like an up yourself, superior tDarlo74 said:
For those who understand, no explanation is needed.
For those who do not understand, no explanation is possible.
For those who do not understand, no explanation is possible.
t then use it by all means!Willie Dee said:
550Hep said:
srebbe64 said:
The tenth person would be in Dubai or Monaco or some such Tax haven and could pay for the other nine to come over and buy them all drinks and still be quids in!
Sorry but tw4t! Why oh fu*king why is it so abhorrent in our society to obtain success and then when you do is there some sort of social imperative to "give back"? I am not say you ought not and should not I am questioning the outrageous situation we have where it is foisted upon you in a format so given by "others".
Because the wealthy benefit massively from living in a society where everyone is well fed and healthy.
What tosh...talk about getting your excuses in early.
It doesn't matter whether you are talking about a high flying lawyer or a popstar.....99.9999% of the time there is huge personal effort that has been required to get them where they are. It may make life's loosers feel better about themselves to write of others successes as a fluke, but it's rarely ever true. (unless you're a loto winner....who are 99.9999% poor people up till that point, because successfull people DONT chase luck with loto tickets)
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