The Tax System Explained with Beer

[mikebike]

NOT NEW BUT SO TRUE.......

The Tax System - Explained With Beer


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 $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, 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

 

[mastakilla]

hadn't read that before, but it's awesome :thumbup:

 

[BranNwebster]

Sounds like this was written for us poor folks to understand we don't understand true economics but by golly we understand beer. I even like the threat.

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.

News flash they are already overseas, so they can pay the laborer even less and line their pockets even more.

This is simple enough for me.

 

[mikebike]

still don't get though do ya....Bran....you would be the one bitch*n about why you only saved a dollar and he saved 10

 

[dako81]

...News flash they are already overseas, so they can pay the laborer even less and line their pockets even more.

...

You've got it completely wrong.

Businesses want to be competitive on prices. This is one way they can own a share of the market. To be competitive on prices, they have to cut costs.

Outsourcing is something businesses do when they can hire a company to do a task for the business less expensively than the business could do it on it's own.

Outsourcing is one way to cut costs, therefore lowering prices.

Outsourcing increases your purchasing power by making available products to you that without outsourcing, would be far to expensive for the company to consider making for profit to sell, or for you to afford.

So the next time you go down to Wal-Mart and spend $3 on a pack of white tee's, thank outsourcing because otherwise those shirts would probably cost $15 or $20 if they had to be produced here.

Added:
Also, the workers they hire in other countries wouldn't show up for those jobs if there were a better job or place for them to go to. A worker making $5/hr in town A is NOT the same as a worker making $5/hr in town B. In most cases outsourced jobs provide better pay than the majority of jobs in that area. So, not only are the companies increasing the standard of living in different places by providing more income, they are increasing your standard of living by making products that you buy cheaper so you can spend more money on more products, or beer!

 

[tom5796]

There is one certainty about taxation; the best way to get less of something is to tax it.

That goes for hard work, innovation, success, etc. Our "progressive" system exponentially taxes success and rewards failure. Bran, look again at the tax tables and this simple math:

One guy makes $100 and is taxed at 15%, another makes $200 and is taxed at 20%. Guy one pays $15, but guy 2 pays $40! Instead of a flat tax at 15% where guy 2 would still paying 2x ($30), he has to pay 167% more than guy one. It's exponential.

Did guy 2 use more government services than guy 1? No. In reality, guy 2 probably used LESS, because he doesn't qualify for other goodies like cheap school loans, subsidized school lunches etc.

Did beer drinker 10 drink more beer than beer drinker 1? If not, then this is systemic welfare.

 

[mastakilla]

Outsourcing increases your purchasing power by making available products to you that without outsourcing, would be far to expensive for the company to consider making for profit to sell, or for you to afford.

How are you going to pay for anything if you don't have a job, cuz all jobs are outsourced?

 

[dako81]

How are you going to pay for anything if you don't have a job, cuz all jobs are outsourced?

Just because someone's job is outsourced doesn't mean that they can't work, or that there are less jobs in the country. Many times things are not even outsourced to a different country.

Example: My friend's dad works for Whirlpool. He is valuable to their company and has worked there for a while. He's got several degrees and has taught college courses, this attests to his value to the company. The vast majority of the department he is in (IT) is going to be outsourced to IBM, so Whirlpool can save money. So, they moved him and several others to a different department that is not going to be outsourced. But, the entry level workers in that department with just bacehlors degrees will either loose their jobs, or try to work out a deal and work for IBM.

It's not fair, but they're not entitiled to their jobs.

You have to be willing to obtain a skill set that will make you valuable to an employer, or be able to vary your current skill set and find a different job.

People are not entitled to their jobs. If as a business owner you have an employee that doesn't do their job, and you can fire them and hire someone different who will, you should. That's common sense.

So, they have to work hard and make themselves competitive.

 

[tom5796]

How are you going to pay for anything if you don't have a job, cuz all jobs are outsourced?

First, all jobs cannot be outsourced. You can't be a mechanic in India and work on a car in Nevada. The key is to work to get yourself out of a risky job. Second, outsourcing today will become a wage equalizer across the globe at some point. In tech, we have already seen this occurring. A company called TCS (division of the huge Indian firm, Tata) has opened a facility in Ohio to complement their Indian operations. Wages in some American communities now rival India for some functions (maybe still a bit of a premium but worth the time zone convenience).

But let's play along. Let's say that Obama decides to raise the walls on corporations (including small companies), which is totally his plan. You will see American firms reevaluating their base of operations. You will see corporate leaders, but more importantly, future corporate leaders who have not built massive stashes of wealth yet, leaving the country for greener pastures. Again, the best way to get less of something is to tax it. This will create a downward spiral of job availability.

I suppose you could raise other "walls" to keep the talented people in, but then you'd really have to add a sickle and hammer to the flag.

 

[dako81]

There is one certainty about taxation; the best way to get less of something is to tax it.

That goes for hard work, innovation, success, etc. Our \"progressive\" system exponentially taxes success and rewards failure. Bran, look again at the tax tables and this simple math:

One guy makes $100 and is taxed at 15%, another makes $200 and is taxed at 20%. Guy one pays $15, but guy 2 pays $40! Instead of a flat tax at 15% where guy 2 would still paying 2x ($30), he has to pay 167% more than guy one. It's exponential.

Did guy 2 use more government services than guy 1? No. In reality, guy 2 probably used LESS, because he doesn't qualify for other goodies like cheap school loans etc.

Did beer drinker 10 drink more beer than beer drinker 1? If not, then this is systemic welfare.

I don't care what the percentages are, it is all stealing. Theft. At the threat of violence.

 

[dako81]

First, all jobs cannot be outsourced. You can't be a mechanic in India and work on a car in Nevada. The key is to work to get yourself out of a risky job....

Yea, you said this better. It is easier to understand looking at it this way than how I said it.

:thumbup:

 

[Oscar54]

And this explains why the Republicans have been so successful in getting the blue collar, NASCAR, working man or anyone else who earns less than $100K a year to vote against their own self interest.

If someone is going to rationalize the best way to fund their government to do those things necessary for a stable and just society by using a bogus contrived scenario that results in violence against the nice rich man trying to help the poor who just don't appreciate everything he's done for them, then their is really no use in attempting rational discussion.