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Barroom Math on taxes

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Suppose that every day, 10 men go out for
beer and the bill for all 10
comes to $100. If they paid their bill the
way we pay our taxes, it
would go something like this:

The first 4 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 10 men drank in the bar everyday 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 10 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 6 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 6 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 procedded 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 paid $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 got!"

"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
atomosphere is somewhat friendlier.

dcervenka05 Uploaded 10/30/2008
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