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Bar Room Economics...


Suppose that every day, ten people 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 (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 (the richest) would pay $59.

So, that's what they decided to do.

The ten 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 were unaffected. They would still drink for free. But what about the other six - the paying customers? How could they divide the $20 windfall so that everyone would get their "fair share"?

They realised that $20 divided by six is $3.33. But if they subtracted that from everyone's share, then the fifth and the sixth would each end up being paid to drink their beer. So, the bar owner suggested that it would be fair to reduce each drinker's bill by roughly the same amount, and he proceeded to work out the amounts each should pay. And so:

The fifth person, 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 drinkers began to compare their savings.

"I only got a dollar out of the $20," declared the sixth. She pointed to the tenth man, "but he got $10!" "Yes, that's right," exclaimed the fifth. "I only saved a dollar too. It's unfair that he got ten times more than I did" "That's true!!" shouted the seventh. "Why should he get $10 back when I got only two? The wealthy get all the breaks" "Wait a minute," yelled the first four in unison. "We didn't get anything at all. The system exploits the poor"

The nine drinkers 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, ladies and gentlemen, 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!


There were a couple of points of view on this:

Gordon wrote:
That is the finest piece you’ve ever printed,,,,, and it’s so damn true and yet people don’t understand at all!!!!! People still want to have their cake,,,, AND eat it, too!

Scott wrote:
This is a cute story and all but it leaves something out. See, it turns out that Man #10 makes 95% of the money in the town and the other 9 guys combine to make up the last 5%. In fact the bottom four, the ones who pay no part of the restaurant tab, combine to make about 0.25% of all of the money in the town. Three of them dont mind because they are teenagers and dont need the money that badly but one of them is actually trying to raise a family on that money - making less than 1/100th of the amount of money that guy 10 makes. Guy 10 on the other hand inherited most of his money, and of course his business which continues to pay him well, from his family. Guys 1 thru 9 however work for a living.

See, 10 might carry a bigger portion of the restaurant check, but he also has a much bigger paycheck. He got there by hording what he can and by colluding with all of the other "10th men" in the world to keep the wages of the bottom 9 down. You cant fault 10 for wanting to make money, but you also cant fault 1 thru 9 for being upset about fighting over his table scraps. And you cant fault them for being upset when the restaurant owner wants to give them even more money, especially because the $10 he gives to guy 10 would mean a hell of a lot more to the first nine guys than to the rich guy who really doesnt need it.

In fact, 10 better be careful, because 200 years ago there were a lot of number 10's who got their heads chopped off during a little thing called the French Revolution. Turns out that guys 5-9 were pretty upset that guys 1-4 were thrown in prison for not being able to pay their bills because guy 10 had all of the money.

But just to finish things up, if 10 wants to go drinking overseas, he'll find that his portion of the restaurant bill is a lot higher there than here. And if he decides that he'd rather just stay home and not pay his portion, well then he can expect that the next morning he's going to either have the IRS knocking on his door or Guys 1-9 with a guillotine. He'd better hope it's the first.

Cheers, brother.

Jay wrote:
Subject: Bar Room Tax -- Flip Side
Regarding you Bar Room Tax, I could not agree with you more.  However, you fail to mention that the tenth (richest) are those who generally hire the sixth and seventh and but pay them peanuts.  Since the sixth and seventh complain, the tenth how hires illegal aliens and/or is outsourcing the jobs of the sixth and seventh. In addition to low wage, outsourcing also affords other benefits for the tenth, including:

1) no labor laws -  work long hours, few benefits, and kids (who needs school anyway) 
2) no environmental regulations, (they can pollute OUR world and get away with it)
3) officials are easy to bribe and its easier to cover it up.
4) et al

It you got any balls, post something about that.

PS: Look at history and see what happens to societies where the wealth is controlled by just a few.  For those who do, it will scare the shit out of you.  For those who don't, ignorance is bliss!.

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