Karaoke Forums

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.





--------------------------------------------------------------------------------
Instant access to the latest & most popular FREE games while you browse with the Games Toolbar - Download Now!

OK, let's settle this once and for all...... Our forefathers designed our government to be financed by import duties and tarriffs, and other non-working wage taxation. The government instituted a temporary income tax to finance the first world war, which somehow, not by the will of the vast majority of Americans, became not only permanent, but the major funding for government and the services it provides. The Rich and Big business, convinced government to drop virtually all duties and tarriffs, so they should pay a bit more. Besides, the taxes that Big Business and the filthy rich pay, they get from the average American.....it's just a consumption tax, we pay when we buy something. Also the Rich became rich, on the backs of the average American. They've exploited the American worker for years, and now they've changed the laws, so they can exploit workers in third world countries, putting American workers out of jobs. Remember the graduated income tax we used to have? The Rich used to pay way more, but since Reagan, they've wittled their rate down quite a bit........it is proven....it doesn't trickle down.......

I usually don't get into policitics but I do hate unfair taxes which is why I like the flat tax discussion. It doesn't matter how much you make its how much you spend.
If you can be frugal with your money then you don't pay alot but if you like to spend spend spend then you pay more taxes.

Lone Wolf

You do know that the more money that you make the more taxes you can actually get out of paying.


I don't know why we don't do some kind of flat tax. A flat tax would be fair if everything would be taxed at the same rate.

I think a flat tax is fair, however, we live in a unique era where the American people have been asked to bail out brokerages and banks to keep wall street from collapsing because they "did not act in the interests for their customers" *Alan Greenspan

Now we are all the owners of millions of bad mortgages and bad debt.

And now it looks like GM, Ford and Chrysler are looking for a massive bailout. We could possibly become part owners of car companies that could not imagine a world past cheap gas. They've known for quite some time now that we need fuel efficient cars, not gas guzzling monsters. Yet, if we don't bail them out, 600,000 workers lose their jobs causing a major uptick in unemployment. This is the conundrum we are all in right now.

Where does it end? I don't have a clue what the best solution is, but why is it called capitalism when millionaires and billionaires get trillion dollar bailouts yet someone that makes $40 000/year is not worthy of a tax cut?

Just my thoughts.

Me, I don't care for beer.

I wouldn't offer a minor a beer anyway........

Seriously though, I love the flat tax idea too. Our tax system is so complicated that I don't think many understand it, including myself, but a flat tax seems the fairest and least complicated.
As far as the auto industry, it irks me too that they kept making all those gas guzzlers, if everyone else could see the writing on the wall, why couldn't they?
I don't like the bailouts either, but if the auto industry is 10% of the economy in one form or another, that would be devastating right now to let them go under. I just hope they are more frugal and appreciative of the taxpayers money than AIG. Extraordinary times require extraordinary measures I suppose.

Taxes? What next, cookies on the Internet?

Aww..com'on. You wouldn't score me a beer? Perhaps some Annie Green Springs? That was the happenin drink back in my high school daze.

I couldn't agree more, our tax system is mind numbingly complicated. Certainly a flat tax would put a large number of accountants out of work. But as mentioned earlier, the rich can find more deductions and loopholes, the effective tax rate of the wealthy can be less than the lower wage earners. The super wealthy pay a lower percentage of their income than you or I. Warren Buffet even admitted to that.

Capitalism by nature creates more losers than winners, and if your political platform is robbing Peter to pay Paul, you can usually count on Paul’s vote when times are tough. That is why our system is flawed. It will always be decided by the majority, and Paul is the majority.

There's an old Ronald Regan quote that comes to mind.. "Democracy is three foxes and a chicken voting on what to have for dinner."

Funny thing is, the rich would pay more under a flat tax without their usual write offs........gee, I wonder why we don't have one.....

On the surface a flat tax seems fair, until you get a person making say $12,000 a year. In Canada and I daresay the US, that person would not have to pay any taxes. On a flat tax of say 10%, that person would have to pay $1,200. That difference could mean the difference between life and death.

For those who begrudge rich people, the majority of them are rich because they work their tails off and put in the hours and in a lot of cases the cash. Corpoations employ millions of people and also give to a myriad of charities.

What gets me is people will moan and complain if a CEO makes a few million a year, yet do not bat an eye when a sports figure makes that or more for playing a game, or the millions actors, musicians, etc for their craft. Not only that but you are willing to pay big bucks to see them.

_________________
You can be strange but not a stranger

Tax by definition, in what ever form, can never be fair. Not many will pay tax if you are not forced to by the law.

_________________
I can neither confirm nor deny ever having or knowing anything about nothing.... mrscott

Try this: The "fair" tax. Seems a little better than the flat tax. It's based on what you spend. NOT what you make.

http://www.fairtax.org/site/PageServer? ... calculator

Kelly

I would surely think that if a flat tax were ever implemented, that there would be be an adjustment for those at the poverty level. 12,000 a year is poverty in my view.
I certainly don't begrudge the rich, not me of all people. I respect and admire them most of the time because for what they were able to accomplish. And I have always taken pride in this great country in that a person could make as much money as they wanted, and that my kids would have the same opportunity. Just depends on how hard one wants to work, and.....ok getting off topic here.
With all this being said, just because someone is rich doesn't mean that they shouldn't pay their fair share of taxes, thats all I'm saying. I don't believe in redistribution, or punishing success, but don't go along with the rich paying zilch because of loopholes, and writeoffs. We all know how numbers can be played with at tax time to help accomplish what one might want. I think a flat tax would help eliminate much of that BS. The pendulum always seems to swing from one extreme to the other.........
Ron

Any tax is a redistribution....life is full of redistribution....

when big businesses threaten to make their products overseas, they forget who is buying what they make. Perhaps we the lower class should stop buying from them altogether.The rich wouldnt be so privilaged if the working class didnt buy their goods. Im tired of those whining babies..let them walk in my shoes for a change. Ill be sure not to shed any tears when they have to sell one of their mansions to pay their heating bill.

_________________
Gladly helping Kappy to become cyber immortal !!

couldnt agree more about the athlete, musician, and actors being grossly overpaid..tv actors especially, who make as much as a million dollars per one hour episode...that is crazy...

_________________
Gladly helping Kappy to become cyber immortal !!

one last thing i wanted to say, why is it that people assume that the rich work harder than the poor..sometimes ones environment can limit ones income potential. I have a lot of friends in construction who make a tenth of the foremans salary...the foreman sits in an airconditioned romm as his workers bust their (@$%&#!). Sometimes success is measured by lineage, or being in the right place at the right time..at least the wealthy have something to show for their efforts when the ones who keep them there only have sore backs to show...

_________________
Gladly helping Kappy to become cyber immortal !!

Brings to mind GM's recall and crushing of all the EV1s amidst the protests of those who had leased them and wanted to purchase them. Let's see... turn down offers of $20,000+ per car, or pay to have them covertly trucked to some unknown place to be secretly crushed? And now ask the American taxpayer to bail them out? That sounds as corrupt as an oil company (Texaco) owning the patent rights to the very battery that could power these electric vehicles for 130 - 200 miles without recharge!

Yep, no tax relief for you guys as long as these type of business practises live!

And how many years did that foreman spend busting his butt to get to that position?

As for the auto industry (the big 3) , other than mediocre vehicles, the UAW did very well in pricing themselves out of jobs.

How many of yu shop around for cheaper prices in whatever products or services you want or need? How many get plumber B because he charges less than pumber A?

_________________
You can be strange but not a stranger

i cant afford a plumber, i fix it myself..as far as the foreman, my point is that there are very hard workers that work harder than he might have ever worked, but his pay is based on heirchy, not workload. out here in the midwest, most business' are inherited from a family member. How bout our farmers? you gonna tell me they dont work hard because their farms are in forclosure due to the low income they make bustin their asses...i actually thought we were drinkin the same koolaid today Timberlea, but i must be wrong, again we agree to disagree.

_________________
Gladly helping Kappy to become cyber immortal !!