1. Attention: We have put together a thread with tips and a tutorial video to help with using the new software. Please take a moment to check out the thread here: Trapshooters.com Tutorial & Help Video.
    Dismiss Notice

Barstool Economics 101

Discussion in 'Uncategorized Threads' started by 391 shooter, Sep 30, 2008.

Thread Status:
Not open for further replies.
  1. 391 shooter

    391 shooter Well-Known Member

    Joined:
    Jun 3, 2008
    Messages:
    2,094
    Bar Stool Economics

    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 no w 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!'

    '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 atmosphere is somewhat friendlier.

    David R. Kamerschen, Ph.D.
    Professor of Economics, Universityof Georgia

    For those who understand, no explanation is needed.
    For those who do not understand,

    no explanation is possible.
     
  2. pendennis

    pendennis Well-Known Member

    Joined:
    Jul 26, 2007
    Messages:
    1,567
    Location:
    Southeast Michigan - O/S Detroit
    We have the second highest corporate tax rate in the world. You'd think that the morons in D.C. would figure out that high taxes on corporations just pass them straight through to the customer.

    Dennis
     
  3. 391 shooter

    391 shooter Well-Known Member

    Joined:
    Jun 3, 2008
    Messages:
    2,094
  4. Bluzman98

    Bluzman98 Member

    Joined:
    Jan 29, 1998
    Messages:
    840
    Actually, taxes are paid on profits (NPBT). The persons affected by a higher tax rate would be the shareholders....lower NPAT equates to lower dividends paid.

    Jim C
     
  5. ou.3200

    ou.3200 Well-Known Member

    Joined:
    Jan 29, 1998
    Messages:
    1,490
    The fact that the amount of taxes is calculated on profits of the corporation is irrelevant. The taxes are still passed through to the customers in the form of higher prices. Taxes become part of the cost of doing business.
     
Thread Status:
Not open for further replies.