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Fri May 4, 2012, 04:00 PM

THE TAX SYSTEM EXPLAINED IN BEER

I got this RW viral email today. I wanted to Reply-All something.

This story is relying on the RW myth that 45% of Americans pay zero taxes. They ignore the fact that they all pay Fed. payroll taxes and/or state and local taxes.

Does anybody remember the story of the rich guy taking all the cookies (or pizza)? Cant seem to find it.

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THE TAX SYSTEM EXPLAINED IN 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 ? 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 every body'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.

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

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




19 replies, 10423 views

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Replies to this discussion thread
Arrow 19 replies Author Time Post
Reply THE TAX SYSTEM EXPLAINED IN BEER (Original post)
ErikJ May 2012 OP
Tommy_Carcetti May 2012 #1
MindMover May 2012 #2
hifiguy May 2012 #7
ErikJ May 2012 #10
geardaddy May 2012 #11
rfranklin May 2012 #3
matt819 May 2012 #4
kentuck May 2012 #5
TedBronson May 2012 #8
kentuck May 2012 #14
ErikJ May 2012 #6
Egalitarian Thug May 2012 #9
jorno67 May 2012 #12
tjwash May 2012 #13
ErikJ May 2012 #15
sadbear May 2012 #17
Aerows May 2012 #18
Zalatix May 2012 #16
bemildred May 2012 #19

Response to ErikJ (Original post)

Fri May 4, 2012, 04:14 PM

1. It's such a crappy analogy, I don't know where to start.

What is beer supposed to be? Is it government services? How exactly can that be quantified? And doesn't this oversimplify what type of government benefits an individual may recieve by all lumping it into one product, i.e. beer?

It's hard to put together a simple rebuttal because it's just so, so stupid. Is this Kamerschen guy even real?

Rule of thumb: Beware of those whose political opinions are based off of chain emails.

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Response to ErikJ (Original post)

Fri May 4, 2012, 04:15 PM

2. I like the one about politics....

What Is Politics?

A little boy goes to his dad and asks, "What is politics?"

Dad says, "Well son, let me try to explain it this way: I'm the breadwinner of the family, so let's call me capitalism. Your Mom, she's the administrator of the money, so we'll call her the Government. We're here to take care of your needs, so we'll call you the people. The nanny, we'll consider her the Working Class. And your baby brother, we'll call him the Future. Now, think about that and see if that makes sense,"

So the little boy goes off to bed thinking about what dad had said.

Later that night, he hears his baby brother crying, so he gets up to check on him. He finds that the baby has severely soiled his diaper. So the little boy goes to his parents' room and finds his mother sound asleep. Not wanting to wake her, he goes to the nanny's room. Finding the door locked, he peeks in the keyhole and sees his father in bed with the nanny. He gives up and goes back to bed. The next morning, the little boy says to his father, "Dad, I think I understand the concept of politics now."

The father says, "Good son, tell me in your own words what you think politics is all about."

The little boy replies, "Well, while Capitalism is screwing the Working Class, the Government is sound asleep, the People are being ignored and the Future is in deep shit."

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Response to MindMover (Reply #2)

Fri May 4, 2012, 04:33 PM

7. Ain't it the truth.

Excellent story.

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Response to hifiguy (Reply #7)

Fri May 4, 2012, 04:49 PM

10. Yes it is, I may use that one in the reply.

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Response to MindMover (Reply #2)

Fri May 4, 2012, 05:02 PM

11. I have to remember that one!

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Response to ErikJ (Original post)

Fri May 4, 2012, 04:16 PM

3. This is designed to confuse the weak-minded among us...

 

and David Kamerschen has denied being the author of it.

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Response to rfranklin (Reply #3)

Fri May 4, 2012, 04:25 PM

4. This one's been making the round for more than a decade

As others have said, snopes.com is your friend.

http://www.snopes.com/business/taxes/howtaxes.asp

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Response to ErikJ (Original post)

Fri May 4, 2012, 04:25 PM

5. If it is analagous to the the tax system?

Then I think it is about right?

If we say a beer is synonymous with a day's work, then it sounds pretty fair. If a guy makes over $1000 per day, then he would have more money left over after his beer than the guy that makes $8 dollars an hour. Fifty nine percent sound like a reasonable tax rate for the top 1%...

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Response to kentuck (Reply #5)

Fri May 4, 2012, 04:36 PM

8. It's not the rate...

 

... but the percentage of the total income.

Maybe you knew that and I missed your sarcasm.

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Response to TedBronson (Reply #8)

Fri May 4, 2012, 05:49 PM

14. No...

I wasn't talking about the total income...the price of the beer was illustrating only $100 dollars. Change that to $100 million dollars and it doesn't sound so unfair.

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Response to ErikJ (Original post)

Fri May 4, 2012, 04:28 PM

6. RW tax Myths exposed

I found these on Moveon.com








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Response to ErikJ (Original post)

Fri May 4, 2012, 04:45 PM

9. This has been posted and thoroughly eviscerated within the last 2 - 3 weeks. n/t

 

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Response to ErikJ (Original post)

Fri May 4, 2012, 05:30 PM

12. I always found this story annoying...

You see in this fictional story the price of beer (or the amount owed) went down, but in the real world the amount owed went way up (cost of unjust wars) and the "10th beer drinker" got to pay less (Bush tax cuts) and then "10th beer drinker" got upset that the he was paying more and took half of everyone's beer (wealth hoarding). But it was OK because giving up your beer to the wealthy was good for the Bar...

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Response to ErikJ (Original post)

Fri May 4, 2012, 05:37 PM

13. That junk is old.SNOPES old. Tore to shreds like the strawman BS it is a million times already

Wouldn't you be more comfortable posting over at youtube?

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Response to tjwash (Reply #13)

Fri May 4, 2012, 05:52 PM

15. Youtube? I still havent found that cookies story

that was so popular about a year ago. Maybe the RWers scrubbed it from the internet.

It was something about 10 guys eating a plate of cookies. The rich guy took all the cookies and left the last one for the rest, then said something.

I like the one about the Wall street guys who walk into a bar and smash it up and when they leave say, Put it on the taxpayers tab. (or something like that).

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Response to ErikJ (Reply #15)

Fri May 4, 2012, 06:20 PM

17. Maybe this?



or he could have said, "Hey, I think that union guy's cookie is bigger than yours'"

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Response to ErikJ (Reply #15)

Fri May 4, 2012, 06:24 PM

18. It's pizza

The pizza is divided into 100 slices. 1 guy comes along and takes 83 slices, the next 9 take 10 slices, and then the other 90 split the 8 slices. It goes something like that.

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Response to ErikJ (Original post)

Fri May 4, 2012, 06:17 PM

16. The problem occurs when the tenth man leaves and finds that

 

taxes are HIGHER elsewhere.

The atmosphere isn't necessarily friendlier overseas. ESPECIALLY not when you are paying ZERO taxes in America and are getting a BILLION dollar tax return.

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Response to ErikJ (Original post)

Fri May 4, 2012, 06:49 PM

19. What utter crap.

If this clown is teaching economics, he should be fired.

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