How out tax systems works

[LESTERUS]

Some of you will like this, some won't. I however am enjoying sending it.

We need to send this to Barack as an economics lesson. He seems to think that the Presidents job is income redistribution and not revenue enhancing tax policies

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. '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.

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

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

Glad to see someone put it in terms I can relate to.

I have seen it before and I like the explaination.: beer:

Just hate the fact that this is going to happen, it's going to hurt night in the ruts (Aerosmith)

[spareparts]

Thats been on here before, a little different numbers, but still the same theory, I personally believe that it would be correct only if everyone was paying the taxes that they are supposed to be paying on their actual income, without the tax caps, loopholes, deductions, hidden income, tax shelters, offshor accounts and other high priced legal ways out of paying your fare share. But thats just what i think. And to put it even more in perspective, most of us(judging by our boats) would fall in to the sixth guy, or maybee a few of ya'll that would be the 7th guy


http://www.wellcraftv20.com/communit...ighlight=taxes

[LESTERUS]

Yep, but i think that taxing the rich more would not help us either, i'm tire of the "robin hood's" of the world. Push come to shove why does everybody wants to attack the "rich" isn't that the american dream to work hard and become wealthy?

[spareparts]

alot of my customers are those "rich" people you are talking about, up untill recently with all the economic issues, they would brag about how little taxes they were actually paying on huge amounts of income by using all the loopholes available. Now they are having to use the "loophole money" to bail out their bad investments, so they aren't bragging much now. I have been witness to some of the most creative finacial tax bypass to have ever heard about, and its all legal. The other day, they had Chuck Norris on the radio talking about his new book( it sounded interesting), part of his pitch about taxes is the federal tax code is 36,000 pages long. There are all kinds of hidden tricks in there. He said his reseach had shown a large percintage of people making over $250,000( i don't the exact details) that pay no taxes, and even had some that were getting a rebate. Like I stated in the earlier thread about the 150ft mega yacht parked here, there has never been one cent of sales tax, property tax, payrole tax, income tax (its operated as a charter business), on the boat, or the fuel, or the stores on the boat because of its foreign regestry, yet its common knowledge the owner lives intown.

[Mac_Attack]

The trickle down theory does not work either. How bout every one pay an equal percentage, no loop holes. Billy Mac

[THEFERMANATOR]

Originally Posted by Mac_Attack

The trickle down theory does not work either. How bout every one pay an equal percentage, no loop holes. Billy Mac

I concur. Also let's quit taxing things 4 or 5 times. When you think about it, most goods are taxed NUMEROUS times even before the end consumer pays tax on it.

[willy]

Lets just set a flat rate tax period

[reelapeelin]

Originally Posted by willy

Lets just set a flat rate tax period

Republican Dick Army (SP?) proposed a flat tax some time ago...and I think it's been attempted by others as well...I think it's a GREAT idea and will support any politician who brings the idea back