Ask500

This is for all you anti tax cut for the rich maniacs.

FOLLOW THIS VERY C-A-R-E-F=U=L=L=Y !

Dick E.

Subject: FW: 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 $50 instead of $59 (15% 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 $9!"

"Yeah, that's right," exclaimed the fifth man. "I only saved a dollar, too. It's unfair that he got nine times more than me!"

"That's true!!" shouted the seventh man. "Why should he get $9 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 wh en 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

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

understand, no explanation is possible.

I understand where you're coming from, and I see both sides of this issue, but I have several problems with your question and story.

1) You addressed those who think it is patriotic to pay higher taxes, yet you told a parable about tax brackets. These are related only in that they both involve taxes.

2) I don't believe that people tend to directly attack the rich when they are given bigger tax breaks. Usually people have enough sense to complain to policy makers, if they in fact complain.

3) It is a rare story in America for a rich person to leave the country solely because they felt bullied by the tax system. (Warren Buffett himself has stated on numerous occasions that the rich should pay MORE taxes)

4) You cited the wrong author: http://www.snopes.com/business/taxes/howtaxes.asp

that's wayyyyy tooo long to read