Subject: TAX SYSTEM EXPLAINED IN BEER

> Try to share this with an Occupier or a Lefty, and watch their puzzled faces... > > > > > > > > > Finally, a way to understand class warfare in real terms. > > > > > > > > T HE TAX SYSTEM EXPLAINED IN BEER > > 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 ? 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 a h 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 . > > > >