Subject: The Tax System - Explained With Beer - Current Tax system before Obama Plan for redistribution
 
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 ba r 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,"decla red 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 en ough 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 atmosphere
 
is somewhat friendlier.
 
David R.  Kamerschen, Ph.D.
 
Professor of Economics
 
University of Georgia
 
For  those who understand, no explanation is needed.
 
For those who do  not understand, no explanation is
 
possible.