Bar Stool Economics

[pwd72s]

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 on 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!"

"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, boys and girls, 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.

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

[gprsh924]

So very simple and so very true, and so many just do not get it.

[pwd72s]

Blatant bump...Gee, where are our resident liberals on this one? Hey Super...where are you???? Aren't tax cuts "only helping the rich"????

[Racerbvd]

I'll bring my own bar stool








I wish

[pwd72s]

If those are your barstools, you can buy ALL the beer!

[Racerbvd]

Originally posted by pwd72s
If those are your barstools, you can buy ALL the beer!

I said, I wish!!!!

This one belongs to a friend of mine

This was for sale in Daytona

[jkarolyi]

Yep, hard to argue with the above. Economics class should be a requirement in all high schools and colleges...amazing how much ignorance there is on the subject.

[SlowToady]

Can you imagine coming home from the bar on one of those? Sheesh...

Racer, any idea how much they cost? A forced induction bar stool is hott.

[lendaddy]

The sad thing is that it's almost spot on to what happened with Bush's tax cuts for the "rich". After it was all over many million were relieved of paying any taxes at all and the rich payed an even higher percentage of the total tax bill than prior. But the mental midgets still claim it unfair. A total disconnect from reality.

[911teo]

I don't know anything, I can't vote (even if I pay a lot of taxes). But to me the above story has little to do with reality.

Usually tax cuts are not spread evenly (in %) among the tax payers.

I am not here to criticize or to sustain Bush's program. But to say that liberals/democrats are idiots when criticizing the tax cut plan is misleading and reductive.

There are ways to "direct" cuts to the class you want. How many low income people have a big stock portfolio that benefits from an hypotetical reduction of capital gain taxes on speculative investments?

Also I think taxes are a civil duty. For the rich to walk away is wrong. I don't like paying taxes (especially when i get so little back from the government) but it is what it is.

[lendaddy]

Originally posted by 911teo
I don't know anything, I can't vote (even if I pay a lot of taxes). But to me the above story has little to do with reality.

Usually tax cuts are not spread evenly (in %) among the tax payers.

I am not here to criticize or to sustain Bush's program. But to say that liberals/democrats are idiots when criticizing the tax cut plan is misleading and reductive.

There are ways to "direct" cuts to the class you want. How many low income people have a big stock portfolio that benefits from an hypotetical reduction of capital gain taxes on speculative investments?

Also I think taxes are a civil duty. For the rich to walk away is wrong. I don't like paying taxes (especially when i get so little back from the government) but it is what it is.

Again, the rich actually pay a larger percentage of the total tax bill now than they did before the cuts. Who do you see as walking away? Maybe I'm not following you.

[911teo]

Originally posted by pwd72s
....
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, boys and girls, 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.

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

The 10th man, the rich man, goes and start drinking overseas...

Look I think that the tax system is really complex.

I think it is stupid (and populist) to criticize a tax cut plan as always favoring the rich.

I think it is also simplistic to say that tax cuts favor the "poor" as the "rich" now carries more % of the tax burden.

[Rot 911]

Perhaps this cartoon will help explain things better:

[Racerbvd]

Originally posted by SlowToady
Can you imagine coming home from the bar on one of those? Sheesh...

Racer, any idea how much they cost? A forced induction bar stool is hott.

The 1st one is on eBay right now,

http://cgi.ebay.com/ebaymotors/2006-BAR-STOOL-RACER-598-C-C-HONDA-POWERED-CRAZY-FAST_W0QQitemZ190105140760QQihZ009QQcategoryZ7251Q QrdZ1QQcmdZViewItem

Tracy won't sell his turbo one (I have tried) more info on that one here www.tgfab.com

The ones at Daytona were like $2,500 and up.

Usually tax cuts are not spread evenly (in %) among the tax payers.

The reason the rich should get a bigger tax cut is they pay more taxes, and most have invested more in themselves to enable them to make the money

[pwd72s]

I'm still waiting for one of Superman's "greedy corporation" rants...

[competentone]

Originally posted by pwd72s
I'm still waiting for one of Superman's "greedy corporation" rants...

You may be waiting for a while.

I would expect the first post on this thread would be considered "kryptonite" by Superman....

[slakjaw]

Where do you get a turbo for a mower motor?

[red-beard]

Does the toilet seat come in anything other than pink? Maybe one of those "spongy" ones?

[pwd72s]

Poor lefties...when the have no logical response, they change the subject.

[on-ramp]

David R. Kamerschen, Ph.D. is an idiot. If it wasn't for the illegals & the lower class in the back washing the dishes, nobody would eat. he makes it sound like the top 5% wealthy in this country get to make all the rules and if it wasn't for them, the economy would tank. that's hog-wash.

and this post comes from a man who's afraid to drive his own 911 car....fearing he might devalue it. please....



your bar stool economics is just stool.