Nov 13, 2008

Economics even Joe Six pack can understand

I'm sure that all the big brains of the democratic strategists would poo-poo this working man's explanation of taxes as being preposterous. But substitute wine-spritzer and day-spa for beer and bar respectively, and I'm sure you'd get their attention:

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,' ex claimed the fifth man. 'I only saved a dollar,
too. It's unfair that he got ten times more than I got' '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, 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.

3 comments:

campcook said...

OH, this is really good! A perfect example of what happens when the "rich" are tapped to "help" the poor!

Larry Wu said...

How about something original in your blog? This has been all around the internet for way over 2 years. ha! Come on, I want to read about your brain, not someone else's

r of randf said...

way over 2 years? even a cursory google on it reveals that it's at least from 2002.

more searches even reveals a whiner posting a whiny post criticizing their friend for "blogging something so old"...coincidence?

and there are quite alot of posts/rants on liberal sites of self described "smart people" spending way too much time trying to "debunk" the math, the absurdity of rich drinking with poor, etc etc. and most of them getting really worked up in their debunking efforts.

me? i just think its a funny story and a simple little allegory describing how lots of people get upset when they don't get their "fair share" of something they never earned or might not deserve in the first place.

it is certainly not original, but the lesson doesn't get old.