The Tax System - Explained With Beer

[abaduck 123]

The Tax System - Explained With Beer

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 realised 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,'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.

For those who understand, no explanation is needed.

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

[x648eng119 2]

Interesting to say the least.... But very logical!

[gamewell45 258]

The Tax System - Explained With Beer

...

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.

For those who understand, no explanation is needed.

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

Simple solution: Drink tap water; much cheaper and better for you!

[helicopper 1,050]

Simple solution: Drink tap water; much cheaper and better for you!

Shall we discuss water bills?

Touche, Abaduck! Very clever.

[IzzyEng4 427]

The only thing I learned is that I'm really thirsty for a beer!

[SageVigiles 1,194]

Great analogy. I'll be passing that on to some friends.

[ny10570 745]

except you forgot that this was the best bar in town and the only one they 10th guy's wife would let him go to. I can live much better on 50% of $1,000,000 a year than I can live on %100 of $15,080 a year. I AM NOT ADVOCATING OUT RIGHT SOCIALISM. However we have a long standing tradition in this country of the haves assisting the have nots and the more you have the more you have to share.

[ckroll 101]

It's funny and informative and correct as far as it goes. The first 4 don't drink for 'free' because there is a cover charge---payroll taxes-- social security and medicare come out directly. And then there's sales tax, gasoline tax et al., that are 'flat' taxes, the poor guys drive the same distance to the bar and pays the same tax for fuel as the rich guy.

Then the fellow at the top who pays $59 steps out for an' important phone call' just before the bill comes, so he isn't at the table--it's called a loophole. And the fellow who pays $18 has a good accountant and he writes the $18 off on his taxes as a business expense, so he only ends up $9 out of pocket.

Let's back up the story a bit. It's a high school reunion. The bottom 4 had to get jobs right out of high school and they're making minimum wage. The middle 4 went to a state school and make decent salaries. The top 2 went to Yale and are junior partners in daddy's investment house. It's not just breaking my heart that Winston Oglethorpe III is paying more for that beer than Billy Bob Travis.

Yes, the top 50% pay almost all the taxes.....but they also earn almost all the money.

If something is easy to understand.....then it's definitely not the US tax code.

[lad12derff 283]

It's funny and informative and correct as far as it goes. The first 4 don't drink for 'free' because there is a cover charge---payroll taxes-- social security and medicare come out directly. And then there's sales tax, gasoline tax et al., that are 'flat' taxes, the poor guys drive the same distance to the bar and pays the same tax for fuel as the rich guy.

Then the fellow at the top who pays $59 steps out for an' important phone call' just before the bill comes, so he isn't at the table--it's called a loophole. And the fellow who pays $18 has a good accountant and he writes the $18 off on his taxes as a business expense, so he only ends up $9 out of pocket.

Let's back up the story a bit. It's a high school reunion. The bottom 4 had to get jobs right out of high school and they're making minimum wage. The middle 4 went to a state school and make decent salaries. The top 2 went to Yale and are junior partners in daddy's investment house. It's not just breaking my heart that Winston Oglethorpe III is paying more for that beer than Billy Bob Travis.

Yes, the top 50% pay almost all the taxes.....but they also earn almost all the money.

If something is easy to understand.....then it's definitely not the US tax code.

You were almost correct except that the 4 poor guys did not drive to the bar because they have no money. They called 911 and waited for FD and EMS to arrive and told them they had a rectal bleed and wanted to be transported to the hospital on the taxpayers dime. The lived 23 blocks from the hospital. When they arrived at the ER they were put in the waiting room and after about 1 minute they got up and walked out to meet the guys at the bar next door to the hospital.

[Remember585 815]

You were almost correct except that the 4 poor guys did not drive to the bar because they have no money. They called 911 and waited for FD and EMS to arrive and told them they had a rectal bleed and wanted to be transported to the hospital on the taxpayers dime. The lived 23 blocks from the hospital. When they arrived at the ER they were put in the waiting room and after about 1 minute they got up and walked out to meet the guys at the bar next door to the hospital.

LMAO.

Not to mention, this story fails to mention who paid for wings...