Post by subdjoe on Jul 21, 2008 16:47:01 GMT -5
A friend fowareded this to me. I thought I should pass it on. I expect that the levelers among us still won't understand.
> 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 on 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.
> 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 on 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.
