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Bill Nelson
Unity Member
Post Number:
2924
Registered: 10-2002
Rating: N/A
Votes: 0 (Vote!) | | Posted on Wednesday, April 09, 2008 - 03:18 pm: |   |
Bar Stool Economics
Best explanation to share with your liberal loved ones, who clearly do
not understand this complex principle.
Our Tax System Explained: Bar Stool Economics
Suppose that every day, ten men go out for beers 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 a
plan to reduce each man's bill, and he worked 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).
Note that the tenth man got the smallest percentage reduction and now
paid 61.25% of the total bill, where he previously paid 59% of the bill.
While I'm struggling to remain in the middle class with today's soaring
energy prices, I realize that I am better off than a lot of folks. I
also understand that without the economic opportunity that comes with
the investment of the rich people far outweighs the supposed unfair tax
breaks they get. Read on. This is where it gets good.
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 e 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.
For those who understand, no explanation is needed.
For those who do not understand, no explanation is possible.
David R. Kamerschen, Ph.D.
Professor of Economics
University of Georgia
"We're going to take things away from you on behalf of the common good."
- Hillary Clinton |
Frank Mazur
Hsympothai Member
Post Number:
303
Registered: 02-2005
Rating: N/A
Votes: 0 (Vote!) | | Posted on Wednesday, April 09, 2008 - 06:44 pm: | |
Bill, Bill, Bill. What's going to happen to you? The first thing I did was Google the attribution. This is what I found. It was the first line on the page:
"Contrary to Internet folklore, Dr. Kamerschen is NOT the author of 'Tax Cuts: A Simple Lesson in Economics.' Additionally, he does NOT know who wrote it."
Obviously, you or some pitiful conservative soul (and that is not to say all conservatives are pitiful) renamed it " Barstool Economics."
I'm beginning to think your irritation is not really with Harry, but yourself.
P.S. The Hillary quote is a fabrication as well, and you know it, Ace!
3-dollar gas. Writers' strike. Read a great book by F. E. Mazur.
SPINE
THE BUCKSELLER
"A BIGGER CASE" |
Fred Dungan
Unity Member
Post Number:
2045
Registered: 10-2002
Rating: N/A
Votes: 0 (Vote!) | | Posted on Wednesday, April 09, 2008 - 09:28 pm: | |
"Every reform movement has a lunatic fringe." - Theodore Roosevelt
http://www.dunganbooks.com |
Harry Simenon
Unity Member
Post Number:
1839
Registered: 10-2003
Rating: N/A
Votes: 0 (Vote!) | | Posted on Thursday, April 10, 2008 - 11:56 am: | |
That is a great lesson in economics Bill. Still a few things elude me, but that is no wonder as you often pointed out to me that I’m rather obtuse.
According to the statement “For those who understand, no explanation is needed. For those who do not understand, no explanation is possible,” it does seem a waste of time to post a lesson that is obvious for those who understand, and impossible to explain for those who do not understand?
But then again I’m the one who does not understand so that would explain everything. Realizing that for me no explanation is possible, my response might be, at best, an amusing insight in the mind of the ignorant.
At the end of the lesson the conclusion is that if you tax the rich too much they might start drinking overseas.
As the ten men pay in dollars, I assume they are Americans.
Overseas could be Asia, but usually Americans mean Europe. But in Europe we also have this barstool economics, so the rich would waste their money traveling to Europe. Besides that they would have to pay in Euros which would multiply the tab by 1.55. Overseas to China might be a bad idea too as the dollar is also sinking towards the Yuan. The rich guy should order and pay really quick if he would like to pay in dollars there too and not pay too much.
Judging by the way the barman plans to divide the bill, the barman seems to be a drunk. I have seen that before: they often refill their glass when they think nobody is watching them. At the end of the evening they need to hold on to the beer handles not to fall, and they have these little watery eyes that swim around in their sweaty head. No wonder he gives them a $20 cut. And DO NOT let such a barman play darts! NEVER!
That the guests accept the plan of an obvious drunk indicates to me that they too had way too much to drink. So I really doubt that the bill will not exceed $100 or $80. At most that is what they will tell their wives when they arrive home! If they still have a wife; most spouses do not like husbands who drink every day in a pub.
As this is simply a decrease in price there is no reason for another division of the bill:
My proposal:
The first four men (the poorest) would still pay nothing.
The fifth would pay $0.80.
The sixth would pay $2.40.
The seventh would pay $5.60.
The eighth would pay $9.60.
The ninth would pay $14.40.
The tenth man (the richest) would pay $47.20.
The barman would probably drink for at least $160.
Now this doesn’t matter that much except for the fifth guy, who might get pissed at me. Sorry about that, fifth guy, but I see no logical reason to have a different tax system for all different prices. At most you might have different taxes for different kind of goods, like there is usually more % tax on cigarettes than bread.
The ten people are all obviously drunk if they start to argue that they save less money than the richer people when they need to pay less for a product. That is why the richer pay more tax, so it is logical that the rich save more money when they buy a cheaper item.
It would be a totally different story al together if the filthy rich would have to pay much less percentage in tax than before. This would be more realistic example for the lesson though, regarding the recent tax cuts for the rich.
In reality the economic advantage of the rich for a nation is minimal: they usually outsource employment abroad and the products they buy are often Asian too as those are cheaper. (Rich guys usually know all about finances.) The rich guy in the US does not pay the bill for the poor, he pays Asian bills.
The people in the middle are important though: they often own smaller businesses or have jobs that DO contribute to society and/or DO provide jobs. Don’t let them pay too heavily for the drinking bill.
Then there are four poor people in this example. If the ten represent the population of the US that should be 1.2 person in reality. That’s a bit difficult to realize with only ten people, lets round that up to 2 people. (One of those two is only poor 1/5th of the time perhaps?)
My advice to the drinking party is that the two poor people should move to Denmark to improve their chances by three of fulfilling the American dream so they can pay for their own drinks, and that the one really rich guy should stay in the US as he indeed would get taxed heavily somewhere else, and might even need to give up his second yacht.
Perhaps it would be a wise investment for the richer guys to pay for the traveling expenses of the two poor as that would save them money in the long run.
(I remember how my family once chipped in to have nasty uncle Nick shipped to Australia. Unfortunately he came back like a boomerang, so they had to chip in again to send him back.)
And they all should drink a bit less so they stop arguing about illogical issues.
"We're going to take things away from you on behalf of the common good."
Hillary Clinton indeed said that (be it quoted out of context,) but Bush and Cheney sure DID this without ever saying it.
Somebody needs to pay for wars and economic mismanagement, and the rich are not going to do that, they even made good money on it.
The rich guys left a running tab for you of an estimated $2 billion a week for Iraq alone, and sneaked out of the bar’s backdoor.
I'm afraid that you and your children will have to pick up the bill!
Cheers! |
Frank Mazur
Hsympothai Member
Post Number:
304
Registered: 02-2005
Rating: N/A
Votes: 0 (Vote!) | | Posted on Thursday, April 10, 2008 - 01:40 pm: | |
I stand corrected on the Hillary quote. That is to say, the words are hers, but the implication suggested in Bill's use are deliberately misleading. For more on it and on other statements purportedly attributed to Senator Clinton, click on this link...
http://www.snopes.com/politics/clintons/marxist.asp
3-dollar gas. Writers' strike. Read a great book by F. E. Mazur.
SPINE
THE BUCKSELLER
"A BIGGER CASE" |
Bill Nelson
Unity Member
Post Number:
2925
Registered: 10-2002
Rating: N/A
Votes: 0 (Vote!) | | Posted on Thursday, April 10, 2008 - 01:56 pm: | |
Frank, Frank, Frank....
It is not my intention (now or ever) to verify every single thing that comes to me as E-Mail. Regardless of who wrote it (who cares, you don't know the good prof. anyway) the lesson in our tax policies is true and accurate.
Secondly, my name is not "Ace", Buddy.
Thirdly, I request you stop explaining what my intentions are about anything I may offer here. You haven't a clue as to my intentions, among other things.
Have a great day, Pal.
Harry, no comment is necessary to you. |
Fred Dungan
Unity Member
Post Number:
2046
Registered: 10-2002
Rating: N/A
Votes: 0 (Vote!) | | Posted on Thursday, April 10, 2008 - 02:21 pm: | |
Pal, Ace, Buddy - aren't we chummy?
http://www.fdungan.com/moreau.htm |
Dennis Collins
Mindsight Moderator
Post Number:
2487
Registered: 06-2002
Rating: N/A
Votes: 0 (Vote!) | | Posted on Thursday, April 10, 2008 - 03:34 pm: | |
Three guys walk in to a hotel and ask for three rooms. The clerk says, "I only have one room available but it has two beds and I can put a cot in there too. It'll be ten bucks apiece."
The guys each give the clerk $10, $30 total and head up to the room.
The clerk begins to feel guilty about cramming them all into one room so he calls the bellboy over and gives him $5 and says to take the money to the guys who just rented the room.
On the way to the room, the bellhop starts thinking that there's really no way to split $5 into three equal shares and so when he gets to the room, he only gives the guys $3 and pockets the other $2.
Now each of the men has only paid $9. $9 X $3 = $27 and the bellhop kept $2. Where's the other buck?
Dennis Collins
Moderator
www.theunrealmccoy.com
http://theunrealmccoy.blogspot.com |
Frank Mazur
Hsympothai Member
Post Number:
305
Registered: 02-2005
Rating: N/A
Votes: 0 (Vote!) | | Posted on Thursday, April 10, 2008 - 04:13 pm: | |
You must have been in one of my junior high classes decades back, Dennis. Some kids had a hard time with it. Others recognized the faulty math/statement at once. I'll not ruin it for others.
Bill, Buddy, Pal, the "Ace" was meant in friendship...although I still sometimes wonder why you're Bill if you're also Richard Alan. As for the lesson about tax policies being true and accurate, it is not. It's just plain stupid and it also makes fun of blue-collar beer drinkers without saying it does. And as for verifying the emails that come to you, I don 't give a hoot whether you do or not. But I do find it insulting that you attempt to pass it on to boardmembers. There's plenty of sites out there that exchange that kind of unsubstantiated crap. This is supposed to be a writer's site where accuracy should count for something and where one writer should not willingly contribute to perpetuating something wrongly attributed to another writer. How would you like it if someone started circulating an email that said "Bill Nelson wishes to inform the world that he has had an epiphany. Whereas he once was a Hillary basher, he now sees the light and supports her 100 percent. What's more, he encourages others to support her in her bid to become President of the United States. He would kiss her feet if he could"?
Now as for intentions... HUH? I don't believe I made any mention of knowing what your mysterious intentions are. So what are you carping about, Big Fellow?
3-dollar gas. Writers' strike. Read a great book by F. E. Mazur.
SPINE
THE BUCKSELLER
"A BIGGER CASE" |
Tom Elkins
Wisdom Member
Post Number:
934
Registered: 01-2005
Rating: N/A
Votes: 0 (Vote!) | | Posted on Thursday, April 10, 2008 - 08:30 pm: | |
I just want the f}ree beer.
Tom Elkins
NORTH of TEXAS
www.authorsden.com/tomelkins |
Tom Elkins
Wisdom Member
Post Number:
935
Registered: 01-2005
Rating: N/A
Votes: 0 (Vote!) | | Posted on Thursday, April 10, 2008 - 08:33 pm: | |
I just want the free beer.
Tom Elkins
NORTH of TEXAS
www.authorsden.com/tomelkins |
Fred Dungan
Unity Member
Post Number:
2047
Registered: 10-2002
Rating: N/A
Votes: 0 (Vote!) | | Posted on Friday, April 11, 2008 - 01:28 am: | |
Whatever happened to Voodoo Economics, a la Ronald Reagan? Reagan won the Cold War by outspending the Russians on defense. We are spending money like a sailor on a binge, but we are nowhere in sight of defeating al-Qaeda. Wasn't this war supposed to pay for itself through increased oil revenues?
http://www.fdungan.com/moreau.htm |
Stephen Lodge
Wisdom Member
Post Number:
645
Registered: 06-2004
Rating: N/A
Votes: 0 (Vote!) | | Posted on Friday, April 11, 2008 - 04:49 am: | |
"but we are nowhere in sight of defeating al-Qaeda."
Where do you get your information, Fred?
http://www.stephenlodge.com
Novels by Stephen Lodge:
"Charley Sunday's Texas Outfit!"
"Nickel-Plated Dream"
"Shadows of Eagles"
|
Harry Simenon
Unity Member
Post Number:
1840
Registered: 10-2003
Rating: N/A
Votes: 0 (Vote!) | | Posted on Friday, April 11, 2008 - 09:02 am: | |
Bill:
"Harry, no comment is necessary to you."
Isn't this a comment to me? |
Harry Simenon
Unity Member
Post Number:
1841
Registered: 10-2003
Rating: N/A
Votes: 0 (Vote!) | | Posted on Friday, April 11, 2008 - 09:04 am: | |
Dennis:
"Now each of the men has only paid $9. $9 X $3 = $27 and the bellhop kept $2. Where's the other buck?"
I thought long and hard about this one to come at only one logical conclusion: Tom got that other buck for his free beer! |
Harry Simenon
Unity Member
Post Number:
1842
Registered: 10-2003
Rating: N/A
Votes: 0 (Vote!) | | Posted on Friday, April 11, 2008 - 09:06 am: | |
Stephen:
"Where do you get your information, Fred?"
Probably at the same place where I get my information. |
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