Wen I first saw this analogy it was in Euros and then again in Pounds. So I don't think it was must as a reflection of the U.S. tax system or any one country. But just as an example of how, so called, progressive taxation has hidden consequences.
Bear
On 25 January 2012 07:32, Paresh Nath <paresh.nath@delhipress.biz> wrote:
There is a fallacy in the example. How does one conclude that the
richest one is paying $ 59. You have pre supposed that the taxes are
as high as $ 59 and that is not supported by any fact. Unless you can
show and prove that this is so, whole story goes flop.
Secondly, try to find out how did the richest man made money that he
is paying a higher tax. Is he a working in mines or on a ship or in a
farm or a supervisor in a factory? No he is cosily sitting in a plush
office with a computer in front of him and manipulating the system. He
has hot line with bankers, share brokers, policy makers, Congressmen,
big tycoons. It is difficult to find out how much of $ 59 he paid for
beer came from taxes paid by fifth, sixth, seventh, eighth and ninth
to the government.
Think, think.
On Jan 23, 2:07 am, Travis <baconl...@gmail.com> wrote:
> **
> New post on *Fellowship of the Minds*
> <http://fellowshipofminds.wordpress.com/author/dcgere/> The tax system
> explained in beer…<http://fellowshipofminds.wordpress.com/2012/01/21/the-tax-system-expl...>by
> DCG <http://fellowshipofminds.wordpress.com/author/dcgere/>
>
> Try and keep up with the math, proggies!
>
> <http://fellowshipofminds.files.wordpress.com/2012/01/beer.jpg>
>
> 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 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 a h 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 <http://davidk.myweb.uga.edu/>, Ph.D. – Professor of
> Economics.
>
> via mrconservative.com<http://www.mrconservative.com/2012/01/tax-system-explained-beer/>
>
> DCG
> *DCG <http://fellowshipofminds.wordpress.com/author/dcgere/>* | January
> 21, 2012 at 2:45 pm | Categories:
> Economy<http://fellowshipofminds.wordpress.com/?cat=17656840>,
> Humor <http://fellowshipofminds.wordpress.com/?cat=376>,
> Taxes<http://fellowshipofminds.wordpress.com/?cat=34919470>| URL:http://wp.me/pKuKY-bZo
>
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