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Ten men go out for a 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 - the paying customers?

How could they divide the $20 windfall so that everyone would get his fair share? They realised 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 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.

For those who understand, no explanation is needed.
For those who do not understand, no explanation is possible."

June 3, 2013

25 Comments • Newest first

WontPostMuch

Obviously it's a bit more complicated than that but LOL @ people that think increasing taxes solves anything.

Reply June 5, 2013
yomamma1134

@Ecliptic: Sorry i was unclear on some stuff. I put the word "rich" in quotation marks to say that they aren't really "rich" but are just making a over average income than most people (like my parents) and are getting taxed higher. I didn't mean to say it was everyone is unemployed because they are laz, but a handful of them. For example there are homeless people out there just using welfare money for drugs instead of trying to get back on their feet. As another personal example, I had a friend in middle school saying his family is poor but yet him and his brother had iphones and he buys expensive shirts and shoes. But again I do not mean to put down the lower income people and am not saying everyone is doing this.

Although I agree with you when you say that our job market is limited. To add to what you said I think that our job market is also limited because majority of our products are imported from countries such as china. For example right now a chinese company is trying to buy out smithfield foods which would cause people to lose their jobs in America. Also, many U.S companies are switching their "made in america" products to other countries.

And the cost of living in where i live (Hawai'i) is also the highest in America which makes it harder for us. So i mean i guess it would only make sense to only increase tax to certain people that have an higher income. But i see a major flaw in that as people can lie about it.

Reply June 5, 2013
Ecliptic

[quote=yomamma1134]I actually agree with what you're saying. Not everyone that gets taxed higher is a millionaire and living a luxury life. My parent's get taxed higher than the average person does as they make around $100k a year. It seems like money is never an issue, but with me and my sister in college, and soon my brother in college as well as a mortgage, we can simply only afford the basic things. We don't have a mansion, luxury cars, or anything like that, and yet my parents get taxed higher than anyone else.

Depending on the situation, majority of the "rich" did not just become "rich" from being layback and was served to them on a platter. They worked their ass off to get where they're at. It's all about managing your money and hard work.

I don't mean to hate on the lower income people at all. But in America all we do is sympathize the lower income people by giving them things such as welfare money, food stamps, and less tax. In my opinion by doing this, we only make them lazy or at least stay at where they're at. Instead we should support them by helping them get back on their feet by getting better jobs.

People have always been fighting for equality in America, and yet we are hypocrites by making people pay a higher tax just because they have an higher income.

P.S sorry if it sounds a little weird or if i said something wrong im tired.[/quote]
The majority of the rich got richer because of exploiting others. Wanna know how all the Wall Street bankers got rich?

You assume that all people are unemployed and don't work because they don't want to. It is more because they can't. The job market is very limited and your government keeps on feeding the banks millions so that they can drive their companies back down into the group and get even more bonuses. Your government focuses more on the Wall Street executives instead of legitimate people that actually need the help.

You realize that we must be taxed unequally in order to equalize everything right? The USA has one of the highest income inequalities in the world. That says that there is a problem.

The 100k tax bracket is taxed like what? 25%-30%? Canadian taxes would kill you...

Reply June 4, 2013
yomamma1134

I actually agree with what you're saying. Not everyone that gets taxed higher is a millionaire and living a luxury life. My parent's get taxed higher than the average person does as they make around $100k a year. It seems like money is never an issue, but with me and my sister in college, and soon my brother in college as well as a mortgage, we can simply only afford the basic things. We don't have a mansion, luxury cars, or anything like that, and yet my parents get taxed higher than anyone else.

Depending on the situation, majority of the "rich" did not just become "rich" from being layback and was served to them on a platter. They worked their ass off to get where they're at. It's all about managing your money and hard work.

I don't mean to hate on the lower income people at all. But in America all we do is sympathize the lower income people by giving them things such as welfare money, food stamps, and less tax. In my opinion by doing this, we only make them lazy or at least stay at where they're at. Instead we should support them by helping them get back on their feet by getting better jobs.

People have always been fighting for equality in America, and yet we are hypocrites by making people pay a higher tax just because they have an higher income.

P.S sorry if it sounds a little weird or if i said something wrong im tired.

Reply June 4, 2013
TheGhosted

Why... is this so long

Reply June 4, 2013
tree720

think this guy's obviously had a few...

Reply June 4, 2013
Jaulian

@pr3stig3: Well...if you are talking about Obamacare, then most of it comes into effect next year, so of course you can't see many results (source: http://philadelphia.cbslocal.com/2013/06/03/effects-of-obamacare-legislation-will-come-slowly-local-experts-believe/). I don't know how long you have been alive, or if you pay attention to any legislation, but the welfare queen ideal that Reagan brought to life was killed when Clinton did his welfare reform in the 90s. Its much more strict now, and im sure there are very little if any who are taking advantage of the system.

Not only that, but the Great Recession has brought a lot of the middle class to its knees, with many losing their houses and needing money to get on by. With my amazing googleing skills I even discovered that Obamacare so far has presented a positive influence with "the rates for individual health plans next year -- for people who buy health insurance on their own -- will be no more than 2 percent higher than the rates small businesses pay now, and in some cases, they'll be as much as 29 percent lower." And everybody knows that the "more work=more money" ideal is ridiculous. It works with the med student thats in residency and works 18 hours a day and ends up with a lot of money when they become a doctor, but it doesn't really work for the single mom with 2 kids who works 2 full time jobs at near minimum wage.

Can't really win on the War on Terror. That was a crapfest, and nobody can deny that. And we really don't know if people in Europe work harder, and you may or may not receive some EMS rage.

PS: I also like to speak from my thoughts, but i like to have real facts back mine up

Reply June 4, 2013
pr3stig3

[quote=Jaulian]Wat. I think it has been clearly shown that trickle down [b]doesn't[/b] work. An example is Reaganomics, in which unemployment went up, Big gains for the rich and not so much for the middle class, Poverty level went up, and the growth rate for the level of productivity went down. I dunno, but it sounds pretty bad to me. If you look at a 2012 study by the Tax Justice Network, it showed that the wealth of the rich does not trickle down but instead it is "amassed and sheltered in tax havens with a negative effect on the tax bases of the home economy". This amount was said to generate 190 to 200 billion dollars....Pretty massive amounts of money to me. And i do believe that it could go towards efficient use, such as making sure a crap ton of schools in Chicago close, or helping rebuild the thousands of structurally inefficient bridges around the country, all of which would help give jobs and stimulate the economy and both of which help the dwindling middle class.[/quote]

Your argument would have worked for any country but the United States. We are one of the worst countries at allocating our budget on worthwhile things. Most of Europe have a higher tax bracket than us, but they also receive more in return. Much, much better healthcare, amazing social security/retirement benefits, cheap universities, more paid days off, etc...

We, on the other hand, worker harder than them, while enjoying a less luxurious lifestyle. Is it our fault for working our asses off and earning a higher paycheck? Why would we face more of the tax burden for doing more work in getting there?

I lose ~$24k per year to taxes. What has those tax dollars done for me so far? Oh yeah... Fund the "war on terror". Or how about paying welfare to unqualified Americans who live off the government? Or how about on healthcare expenditure that has shown close to zero results?

Yeah no thank you. I'd rather have more money to invest and spend, while injecting money into the economy. What's to motivate me in succeeding in life if I know my money will be going to the government's pockets?

PS: I could Google articles that counter your points too, but I'd rather speak from my own thoughts

Reply June 4, 2013 - edited
misslime

youre not smart

Reply June 3, 2013 - edited
Blackest

[quote=SirJayGatsby]Very well laid-out story from where ever you got it and if you came up with it on your own then bravo.[/quote]
This has been on basil at least 10 times.

Reply June 3, 2013 - edited
SirJayGatsby

Very well laid-out story from where ever you got it and if you came up with it on your own then bravo.

Reply June 3, 2013 - edited
Jaulian

[quote=pr3stig3]That's true. From a pure economic standpoint, taxes are terrible and create negative externalities that result as a deadweight loss. For all the people saying "we should tax the rich more," realize that our society is based on a trickle down system. Money from the top will eventually flow down. However, money taken by the government rarely gets put to the most efficient use.[/quote]

Wat. I think it has been clearly shown that trickle down [b]doesn't[/b] work. An example is Reaganomics, in which unemployment went up, Big gains for the rich and not so much for the middle class, Poverty level went up, and the growth rate for the level of productivity went down. I dunno, but it sounds pretty bad to me. If you look at a 2012 study by the Tax Justice Network, it showed that the wealth of the rich does not trickle down but instead it is "amassed and sheltered in tax havens with a negative effect on the tax bases of the home economy". This amount was said to generate 190 to 200 billion dollars....Pretty massive amounts of money to me. And i do believe that it could go towards efficient use, such as making sure a crap ton of schools in Chicago close, or helping rebuild the thousands of structurally inefficient bridges around the country, all of which would help give jobs and stimulate the economy and both of which help the dwindling middle class.

Reply June 3, 2013 - edited
Chema

[quote=civfanatics]I love this story [/quote]

IKR? I love how it completely forgets about tax evasion, cost externalization and immigrant exploitation.
rich people must have it hard to drive all their 4 cars on a smooth pavement while the poor people have the awesome experience of walking on the clunky mud to get to their amazing jobs

Reply June 3, 2013 - edited
sparkshooter

I loved that, it was a lovely story.
But I know nothing about the economy.

Reply June 3, 2013 - edited
RhythmKiller

Everything works on paper, I doubt it's like that on practice because of corruption and other stuff.

Other thing I don't undertand is how the men in your story understand nothing about reduction on values that rely on percentages (like how the 5th man now saved 100% compared to the 16% man, and still complains). I doubt people are THAT stupid.

Reply June 3, 2013 - edited
airforce1

[quote=WhatIsAUsername]
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.

For those who understand, no explanation is needed.
For those who do not understand, no explanation is possible."[/quote]

Have you been reading Atlas Shrugged again?

Reply June 3, 2013 - edited
Moist786

Can you read me my bedtime stories from now on. : P

Reply June 3, 2013 - edited
crazymaster

So the economy is all screwed up because some dumbarse bartender decided to charge less in a system that worked well already... GG

Reply June 3, 2013 - edited
IWantWorkGlv

I actually get it ^^

Reply June 3, 2013 - edited
pr3stig3

That's true. From a pure economic standpoint, taxes are terrible and create negative externalities that result as a deadweight loss. For all the people saying "we should tax the rich more," realize that our society is based on a trickle down system. Money from the top will eventually flow down. However, money taken by the government rarely gets put to the most efficient use.

Reply June 3, 2013 - edited
d3eath4ng3elx

except i smuggle drinks so i dont play anything

Reply June 3, 2013 - edited
civfanatics

I love this story

Reply June 3, 2013 - edited
Blackest

get the hell out

Reply June 3, 2013 - edited