Written By:

David R. Kamerschen, Ph.D.

Professor of Economics, University of Georgia


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.

Obama, this is not the way to help the economy!!!!!

David R. Kamerschen, Ph.D.
Professor of Economics, University of Georgia

Great analogy, MelZ, but unfortunately, the mindset of many would be that #10 is evil for earning so much money in the first place.....

This humerous little article has been going around the net for a while, attributed to various authors. Snoops has more information....probably nothing to do with Obama.
http://www.snopes.com/business/taxes/howtaxes.asp

Originally Posted by Bogie Shooter

This humerous little article has been going around the net for a while, attributed to various authors. Snoops has more information....probably nothing to do with Obama.
http://www.snopes.com/business/taxes/howtaxes.asp

yes, have seen this many times from many different people.

Probably more important than the author is the premise of the article. It certainly applies to the current Democratic candidate for the office of presidency.

was the cartoon in yesterday's paper showing the big 'O' with his hundreds of millions of $$$$ contributions and McCain with his much smaller basket......proposing application of sharing of the wealth....
spot on!!!!

BTK

Originally Posted by Peachie

Probably more important than the author is the premise of the article. It certainly applies to the current Democratic candidate for the office of presidency.

Pretty much explains the Democratic philosophy in the simplest of terms. I can't imagine why anyone doesn't understand and agree with the message.

Originally Posted by Peachie

Probably more important than the author is the premise of the article. It certainly applies to the current Democratic candidate for the office of presidency.

sure glad McPalin dont fall under that heading? dont know what this country would have done without him there the last how many years keeping the republicans straight.

Originally Posted by GMONEY

sure glad McPalin dont fall under that heading? dont know what this country would have done without him there the last how many years keeping the republicans straight.

Please translate your political speak?

Originally Posted by MelZ

Please translate your political speak?

um ,, whats good for the goose, probably started with the gander???

Originally Posted by GMONEY

um ,, whats good for the goose, probably started with the gander???

That sure explains your point of view................