Beer Tab Economics

[TORQDSS]

Some have heard this before, some not…

BEER TAB ECONOMICS

Suppose that every day, ten men go out for beer and the bill for all ten
comes to $100.00.

If they paid their bill the way we pay our taxes, it would go something
like this:

1. The first four men (the poorest) would pay nothing.
2. The fifth would pay $1.
3. The sixth would pay $3.
4. The seventh would pay $7.
5. The eighth would pay $12.
6. The ninth would pay $18.
7. 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:

1. The fifth man, like the first four, now paid nothing (100% savings).
2. The sixth now paid $2 instead of $3 (33% savings)
3. The seventh now pay $5 instead of $7 (28% savings)
4. The eighth now paid $9 instead of $12 (25% savings)
5. The ninth now paid $14 instead of $18 (22% savings)
6. 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 man and beat him up.

The next night the tenth man didn’t show up for drinks, so the nine men
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 benefits
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

[tpgsr]

:tup: I have heard a version of that, but not that indepth and accurate with %'s and all.

[theblue]

classic republican “if you tax me because I’m rich then I’m going to hold my breath until you take it back… I’m serious guys… i’m going to explode… here it comes…”

this example doesn’t work because the example implies that the system is fair to begin with. the top 5% haven’t been paying enough for a while now. in a democracy, when the top end gets too wealthy, the rest user their numbers as a strength to fix things… call it a market correction. cue the election…

[AfXtc777]

Bah, i’m joining MIB if I don’t exist I don’t have to pay taxes!!!

[zwarbyt]

what a load of crap…

and its more like there are 1000 men in the bar
100 dont pay
899 pay $1
and 1 guy pays $20

That guy who pays 20?

He owns the bar, the street its, on, all the business and also made eveyone else pay a 5 dollar cover to get in.

FUCKING IDIOTS

[theblue]

bravo, I like your one better,:bigclap:

[BigRon]

@zwarbyt

what a load of crap…

You seriously need big text to get your point across?
You must be one angry drunk.

I hate when people think that decreasing the incentives of striving to be successful will help the economy or help the country.
-Public health care = less money for doctors and less of an incentive to goes to school for X number of years and become good doctors
-Lower the number of years for patients on drugs to make generic cheaper drugs = no money and less advances in medicine

The same idea goes with raising taxes, in my mind. You are taking away part of the incentive of striving for the American dream.

I say get rid of the income tax and increase the sales tax.

[BooSting]

http://nyspeed.com/forums/showthread.php?t=44953&highlight=beer+economics

@Blue Eyed Devil

This has made the rounds before but is still interesting.

Our Tax System Explained: 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 began shouting at him. 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.