04-17-2010, 04:02 AM | #41 |
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07-01-2010, 10:23 AM | #42 |
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12-14-2010, 07:21 PM | #43 |
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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 ball. > > "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 men would 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 a higher percentage. > > They decided to follow the principle of the tax system they had been using, and he proceeded to work out the amounts he suggested that each should now pay. > > And so the fifth man, like the first four, now paid nothing (100% saving). > > The sixth now paid $2 instead of $3 (33% saving). > > The seventh now paid $5 instead of $7 (28% saving). > > The eighth now paid $9 instead of $12 (25% saving). > > The ninth now paid $14 instead of $18 (22% saving). > > The tenth now paid $49 instead of $59 (16% saving). > > Each of the six was better off than before. And the first four continued to drink for free. > > But, once outside the bar, the men began to compare their savings. > > "I only got a dollar out of the $20 saving," 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 benefit than me!" > > "That's true!" shouted the seventh man. "Why should he get $10 back, when I got only $2? The wealthy get all the breaks!" > > "Wait a minute, "yelled the first four men in unison, "we didn't get anything at all. This new tax 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 their 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 government ministers, is how our tax system works. > > The people who already pay the highest taxes will naturally 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 > > For those who understand, no explanation is needed. > For those who do not understand, no explanation is possible.
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08-07-2011, 06:20 PM | #44 |
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