|
Bar Economics
Suppose that every day, 10 men go out for drinking and the bill for all 10, 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 10 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 drinking by $20.' Drinks for the 10 now cost just $80.
The group still wanted to pay their bill the way we pay our taxes so the first 4 men were unaffected. They would still drink for free. But, what about the other 6 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 6 is $3.33. But if they subtracted that from everybody's share, then the 5th man and the 6th man would each end up being paid for his drinking. 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 man should pay.
And so:
The 5th man, like the first 4, now paid nothing (100% savings).
The 6th now paid $2 instead of $3 (33% savings).
The 7th now paid $5 instead of $7 (28% savings).
The 8th now paid $9 instead of $12 (25% savings).
The 9th now paid $14 instead of $18 (22% savings).
The 10th now paid $49 instead of $59 (16% savings).
Each of the 6 men was better off than before. And the first 4 men continued to drink for free. But once outside the restaurant, the men began to compare their savings.
'I only got a $1, out of the $ 20', declared the 6th man.
He pointed to the 10th man, 'but he got $10!'
'Yeah, that's right, 'exclaimed the 5th man. 'I only saved a $1, too.
It's unfair that he got 10 times more than I!'
'That's true!!', shouted the 7th man.
'Why should he get $10 back when I got only $2? The wealthy get all the breaks!'
'Wait a minute,' yelled the first 4 men in unison. 'We didn't get anything at all.
The system exploits the poor!'
The 9 men surrounded the 10th man and beat him up.
The next night the 10th man didn't show up for drinks, so the 9 sat down and had drinks without him. But when it came time to pay the bill, they discovered something important.
They didn't have enough money between all 9, of them for even half of the bill!
And that, boys and girls, men and women, working people, beats & bums, free loaders, 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 economic atmosphere is somewhat friendlier.
For those who understand, no explanation is needed.
For those who do not understand, no explanation is possible.
|
Linear Mode
