Off Topic · Our tax system explained so that the "everyman" can understand them. (page 1)

(Bar Stool Economics)

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 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.

OK, so the rich people move, which gives other people the benefit to step up on the ladder. And who's to say that we're all ganging up on the 10th man and beating him up and kicking him out in the first place? If anything, we're getting a little extra money to go out and support his business. This is not an accurate model in any sense.

This is the part I don't get:

"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.

Why didn't he just leave the price the same?

I'm not sure you can really compare our economy to beer. The cost of running the country doesn't go down the way the beer in this imaginary bar does.


[Edited by - basketballjones on 11-04-2008 13:14]

The tenth man may be fed up that he is being treated unfairly but he won't leave the restaurant. He may not show up for a couple of nights but he is still going to make sure that he has a seat at the restaurant which by the way charges for your seat whether you eat there or not.

[Edited by - pharzeone on 11-04-2008 1:32 PM]

I didn't know that there was a 59% tax bracket.

That’s why reach people are not drinking with pure...

I have seen this before and regardless of how true and accurate it is, if you can't comprehend the reality of it, like apparently some of you can't, then there is no amount of explaining that is going to convince you of the sheer facts. The truth is that the rich are rich mostly because they have earned it. It is an outright crime to take money from one person and their hard work and just give it to someone based on their low income level.

We will soon see what happens, when you penalize those who are the producers in society. The rich will remain rich as they will put their money where it cannot be touched and where it is not working to provide jobs and opportunities for others.

How many jobs do poor people create for other people? At what point do those who produce see that they are not gaining anything anymore so they pull back? Then what happens to the tax base? Then what happens to all those free money "checks"? The answer is that the government cannot make ends meet and collapses.

Beware of the end game. Those who are wishing for "change" will get exactly what they ask for.

Posted by Allanfan20:

OK, so the rich people move, which gives other people the benefit to step up on the ladder. And who's to say that we're all ganging up on the 10th man and beating him up and kicking him out in the first place? If anything, we're getting a little extra money to go out and support his business. This is not an accurate model in any sense.

Your beating him up (according to this scenario) by putting Obama in the house, which his plan is to tax the rich even more. And as far as spending money to give back to the rich man, how did that work for the system when we all got those stimulus packages? I don't see the economy doing any better for it.

This is kind of what I was trying to bring up about upsetting a system that has been in place for decades, on another thread called 'How do you folks feel about spreading the wealth'?

Let's hope Bam doesn't have to do a back track on this one and ends up doing the famous 'read my lips' scenario, like George Sr. had to do when he told the people 'read my lips, no new taxes' only to have to tax the hell out of everyone after all.


And by the way Mattshaw78, not to belittle your scenario here, but I could have sworn I read something exactly like this scenario about 15 years ago somewhere. Where'd ya get it from?

[Edited by - 4949 on 11-04-2008 10:34 PM]

Great post!

Posted by 4949:

Posted by Allanfan20:

OK, so the rich people move, which gives other people the benefit to step up on the ladder. And who's to say that we're all ganging up on the 10th man and beating him up and kicking him out in the first place? If anything, we're getting a little extra money to go out and support his business. This is not an accurate model in any sense.

Your beating him up (according to this scenario) by putting Obama in the house, which his plan is to tax the rich even more. And as far as spending money to give back to the rich man, how did that work for the system when we all got those stimulus packages? I don't see the economy doing any better for it.

This is kind of what I was trying to bring up about upsetting a system that has been in place for decades, on another thread called 'How do you folks feel about spreading the wealth'?

Let's hope Bam doesn't have to do a back track on this one and ends up doing the famous 'read my lips' scenario, like George Sr. had to do when he told the people 'read my lips, no new taxes' only to have to tax the hell out of everyone after all.


And by the way Mattshaw78, not to belittle your scenario here, but I could have sworn I read something exactly like this scenario about 15 years ago somewhere. Where'd ya get it from?

[Edited by - 4949 on 11-04-2008 10:34 PM]

This scenario I got this from office discussions

Posted by GoNyGoNyGo:

I have seen this before and regardless of how true and accurate it is, if you can't comprehend the reality of it, like apparently some of you can't, then there is no amount of explaining that is going to convince you of the sheer facts. The truth is that the rich are rich mostly because they have earned it. It is an outright crime to take money from one person and their hard work and just give it to someone based on their low income level.

We will soon see what happens, when you penalize those who are the producers in society. The rich will remain rich as they will put their money where it cannot be touched and where it is not working to provide jobs and opportunities for others.

How many jobs do poor people create for other people? At what point do those who produce see that they are not gaining anything anymore so they pull back? Then what happens to the tax base? Then what happens to all those free money "checks"? The answer is that the government cannot make ends meet and collapses.

Beware of the end game. Those who are wishing for "change" will get exactly what they ask for.

Oh please. That is not so simple. Fact is, if I take money from people by strength, it's a no-no. But if I take it from people based upon intellect, then it's okay. Fundamentally, that's how it works.

When you have money, you can sit idle and profit from others' work. Maybe if you decide to continually work, you make more and more, typically as a merchant or financial manager, not really doing anything. And if you're a doctor you'll make more money by servicing the wealthy. And if you're a lawyer you can become wealthy by supporting laws which ensure class division. If you're a teacher you get ahead by educating the rich, though you probably believe education is the great equalizer. If you're a soldier you get ahead by telling those you fought with in the past to lay their life down, though their job description today is to get paid shit to protect civilian contractors for work the soldiers themselves could probably do.

Not to mention, there are generational issues. Such as our great owner Dolan, he certainly didn't become wealthy because he earned it.

So, please, let's not assume that the poor are poor because they don't work hard.

Posted by GoNyGoNyGo:

I have seen this before and regardless of how true and accurate it is, if you can't comprehend the reality of it, like apparently some of you can't, then there is no amount of explaining that is going to convince you of the sheer facts. The truth is that the rich are rich mostly because they have earned it. It is an outright crime to take money from one person and their hard work and just give it to someone based on their low income level.

We will soon see what happens, when you penalize those who are the producers in society. The rich will remain rich as they will put their money where it cannot be touched and where it is not working to provide jobs and opportunities for others.

How many jobs do poor people create for other people? At what point do those who produce see that they are not gaining anything anymore so they pull back? Then what happens to the tax base? Then what happens to all those free money "checks"? The answer is that the government cannot make ends meet and collapses.

Beware of the end game. Those who are wishing for "change" will get exactly what they ask for.

Disagree completely. First off, maybe rich people work hard, but that doesn't mean they don't work harder than people who get paid less. Prove me wrong. Go to all work places and tell me how the rich are working harder or how the poor are working harder or middle class working harder. And what is your definition of working hard, btw? It's nonsense when people say stuff like that. And why should we get taxed more, so that the money goes to the rich?

Posted by Allanfan20:

Posted by GoNyGoNyGo:

I have seen this before and regardless of how true and accurate it is, if you can't comprehend the reality of it, like apparently some of you can't, then there is no amount of explaining that is going to convince you of the sheer facts. The truth is that the rich are rich mostly because they have earned it. It is an outright crime to take money from one person and their hard work and just give it to someone based on their low income level.

We will soon see what happens, when you penalize those who are the producers in society. The rich will remain rich as they will put their money where it cannot be touched and where it is not working to provide jobs and opportunities for others.

How many jobs do poor people create for other people? At what point do those who produce see that they are not gaining anything anymore so they pull back? Then what happens to the tax base? Then what happens to all those free money "checks"? The answer is that the government cannot make ends meet and collapses.

Beware of the end game. Those who are wishing for "change" will get exactly what they ask for.

Disagree completely. First off, maybe rich people work hard, but that doesn't mean they don't work harder than people who get paid less. Prove me wrong. Go to all work places and tell me how the rich are working harder or how the poor are working harder or middle class working harder. And what is your definition of working hard, btw? It's nonsense when people say stuff like that. And why should we get taxed more, so that the money goes to the rich?

I kind of agree with that. The rich are rich for many reasons. Some work hard, some work smart, most work hard and smart. Some were handed millions. Some don't deserve it. Many do. A lot of poor people work extremely hard. It's hard to categorize anyone. Some are poor because they are lazy. Some are poor because they have fallen on tough times. some are poor because no one has taught them the steps it takes to be rich or even middle class. Some are poor because psychologically somthing holds them back. There are many factors.

Regardless, I understand where people are coming from with taxation. I worked 17 hour days for 5 years to get what I have. I personally have no problem giving some back and do more than most. I give of my time and my money. But I do it on my terms, which is the way I led my life. I have a problem with the govt deciding where my hard earned money goes. I don't understand why someone in government is any better at deciding where it goes than anyone on this site. I would be perfectly open, if I knew my money went to schools or other programs that actually work in my community. But to take more money from me and still see how much money is wasted in Washington is beyond me. Again, I'm no conservative. I'm more than willing to do my part to help others. But I want to actually see it working.

[Edited by - bippity10 on 05-11-2008 4:26 PM]

On the other hand, the other way I can see that this could work is 'Bam empowers all of those people who been wanting either to start or strengthen their businesses to other levels, opening up the playing fields and creating greater wealth among poorer groups, minority groups and a good chunk of the middle class of people, who in turn could find them selves becoming 'givers back into the system' because as I said before, by taxing the rich, they may end up cutting back on something as huge as fund raising. It's a billion dollar industry in itself, that has helped to create thousands, if not millions of jobs, not to mention help the growth of others as individuals or groups.

People will say 'there's no room on top of the mountain'. But I say we have a ton of work to do in cleaning up our environment first of all and there is forever ideas that need to be brought to the forefront of our societies, harvested and implemented. And what is one of the famous business rules? 'Where there is a problem, there is opportunity'

Create more mountains.

Now as an example of fundraising, it is an important part of how many services are funded by private corporations that otherwise would not be possible. That is just one' example of our balanced system (or really, a 'one tracked minded' system). As a matter of fact, it almost seems that the more the rich got tax breaks, then the more they were able to give. It's a built in system. How do you rebuild it 'without skipping a beat' is the question? The one we have now is the 'beer drinkers society' (hence Matts story)

So like said, if the Bam tax system can spur business in other sectors of our society, then it could become the new and (very important) 'expanded' source for fundraisers of virtually anything. When he talked to Joe the plumber, I know Joe didn't really understand what he was saying, because Joe was only thinking of himself and not the growth and improvement of other people. Or for anyone' for that matter. But that conversation, when Bam said he wanted to give other people a break told me a lot of things.

I"m thinking of it this way. We have a very stubborn system that has refused to change for decades. I look at it like energy. We are moving further and further away from nuclear, dam and oil power and more into wind, solar and bio energies. It's just a matter of the new system having a chance to prove itself and a matter of time. I think the Bam tax system can work. Because society tends to forget it's most important resource - people power!!!

I"m actually liking it more and more the more I think about it. It's like changing your portfolio. You don't lose money and might even gain. Can you imagine if in about ten years, the very rich constituted for about 20% of society (instead of 10% now) in this country? The possibilities and opportunities would be phenominal. Education could, would expand and all social problems would have a better chance of being solved.

Hey' they been doing it in Europe and Canada. Why not us? I think this could work? Make the people happy and not only that, but Bam would increase his chances of re-election. Screw the 10%. Doors open for them, if they wanna play and unless they are stupid, they will catch on also. I also think it is time to alter this system anyway, now that it is a world market and if one fails, we all fail system. We need a change just for that at least.

Anyway, just a few more thoughts on it.



[Edited by - 4949 on 11-06-2008 11:44 PM]

Picked up a BusinessWeek magazine today and very interesting information regarding business and the new administration coming in.

I did not realize that the Dow dropped 400 points the day after Obama won election! Another thing I didn't know was that 74% of business executives fear an Obama consequence vs. 19% worried about a McCain oval office.

It falls in line with some of what I have been saying above and makes you wonder how far business execs are going to want Bam to bend.

Article below. Good information to soak in and think about:

http://www.businessweek.com/magazine/con...