# Bar Stool Economics



## UncleJoe (Jan 11, 2009)

*Bar Stool Economics: A Simple Guide to the American System of Taxation and Distribution*

Suppose that every day, ten men go out for a 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 $1.00

The sixth would pay $3.00

The seventh would pay $7.00

The eighth would pay $12.00

The ninth would pay $18.00

The tenth man (the richest) would pay $59.00

So that's what they decided to do. The men drank in the bar every day and seemed quite happy with arraignment, 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 $20.00.

"Drinks for the ten men now cost just $80.00

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 there "fair share?" They realized that $ 20.00 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, 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 union. " We didn't I 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, journalist 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.

http://www.shtfplan.com/headline-ne...-system-of-taxation-and-distribution_07252012


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## *Andi (Nov 8, 2009)

No matter how many times I see this ... it still rings true.

And to be honest some will never see/get it!


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## partdeux (Aug 3, 2011)

*andi said:


> no matter how many times i see this ... It still rings true.
> 
> And to be honest *most*will never see/get it!


fify !


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## homeschoolmomma (Jul 12, 2012)

I've never seen that before...but it's a keeper for sure. Got a great kick out of it. Thank you!


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## UncleJoe (Jan 11, 2009)

*Andi said:


> No matter how many times I see this ... it still rings true.
> 
> And to be honest some will never see/get it!





homeschoolmomma said:


> I've never seen that before


I'd never seen it either. How long has it been around?


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## *Andi (Nov 8, 2009)

UncleJoe said:


> I'd never seen it either. How long has it been around?


My husband told me the story about 10 years ago (give or take a year or two), he heard it at a sales meeting and I've seen it posted on a few forums ...


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## kejmack (May 17, 2011)

I copied it and sent it to my three college aged boys.


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## BillS (May 30, 2011)

I'm sorry. I just thought that was really stupid. The top 1% of wage earners pay 40% of all income taxes. They're the ones who do the most saving, investing, and making the economy grow. Economic growth is different than economic activity. The more savings you have in the economy the more the economy grows in the long term. If the world continued on for another hundred years you'd see people in South Korea and Taiwan with a higher standard of living than the US because their savings rate is much higher than ours. Having the government rob the highest achievers and even forcing them to leave the country like Obama has doesn't help America. It just helps jealous and ignorant people feel better.

http://blogs.wsj.com/wealth/2011/09/26/why-the-rich-pay-40-of-taxes/

"We are often reminded these days that the top 1% of earners in America pay about 40% of the nations federal income taxes-nearly double the share they paid in 1980. "

The other travesty in the tax system is that about half of American tax payers either pay nothing or they get more in benefits (like the Earned Income Tax Credit) than they pay in. That's a built in rob-the-rich constituency for the Democrats.

The real problem with the federal government is that it spends too much. After the huge spending increases that Obama has made the Democrats say that the only solution is higher taxes. The truth is that raising tax rates lowers revenue and lowering tax rates raises revenue. The two things move in opposite directions.

Reagan made the biggest tax cuts in history. They led to big increases in GDP and revenue.

http://en.wikipedia.org/wiki/Reaganomics

"During the Reagan administration, federal receipts grew from $618 billion to $991 billion (an increase of 53%); while outlays grew from $ 746 billion to $1144 billion (an increase of 60%)"

The lesson here is that no matter how much money the federal government gets it's never enough.


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