Being Poor: It’s like drinking beer forever for free!

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It’s bad enough that all of the wealth in the world is owned and controlled by like 10% of the population, but it’s downright annoying when the rich people try to whine and make you feel sorry for them.

Read the below screed that was written by an Economics Professor to whine about the burden of taxes on the rich. It sort of sounds convincing until you realize that they compare living below the poverty line with drinking beer for free forever.

The rich people should just be happy that the other 90% of the world is too busy hating each other because of their race, religion, or nationalities to realize that they should be getting together and taking away the wealth of all the people that are hogging up the world’s prescious resources.

Our Tax System Explained: Bar Stool Economics

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

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 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 got”

“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, ladies and gentlemen, 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.

4 Responses to “Being Poor: It’s like drinking beer forever for free!”

  1. Your intro decrying this is so lame. Wealth in the world is not a zero-sum game. If you take the money away from the wealthy, it doesn’t make more available for you in the future. Wealth has to be created, either through hard work, good luck, or extortion & theft. You obviously don’t know how to do that, and are envious of those that do. You benefit from them, but bite and scratch at their feet as they feed you. I’m sure you believe most wealthy got that way through extortion and theft. Sour grapes indeed.
    You claim the wealthy are hogging up the worlds precious resources. I’d like to know what resources guys like Bill Gates & Larry Ellison are “hogging up” that, if left unused by them, would have any effect on the world?

  2. The first for men make less than $300 dollars a week.
    the fifth man makes $400 pays .0025% of his income for beer
    the sixth makes $600 pay .005% of his income for beer
    the seventh makes $800 pays .00875% of his income for beer
    the eighth makes $1000 pays .012% of his income for beer
    the 9th makes $1500 pays .008% of his income for beer
    the tenth makes $25,000 pays .00236% of his income for beer

    Does this system still seem fair??

    The person in the middle is paying the greatest amount of his income on beer (err Taxes)

  3. Ummm Randall,

    You’ve got it WRONG, Buddy. Here’s the latest on taxes and who *actually* pays what.
    http://www.ibdeditorials.com/Polls.aspx?id=306544979917316#polla
    Guess YOU fall into te ignorant 90% as well.
    Doc

  4. Bar stool economics – with one additional assumption

    The discussion below based on the assumption that the budget is balanced, and the 10 men only drink what they can afford collectively as a group. The only question then is how to divide up the bill fairly among the people.

    But what if the bar bill costs $120 each week, and the ten men agree they will pay $100 of it now and $20 in the following week.

    The bartender says “OK – I’ll give you an IOU” but you’ll have to pay interest on it and that will decrease the amount of beer that you and your friends can buy in the future.

    And if you don’t pay the IOU off – and the debt keeps getting larger – then your kids will have to assume the debt and it will be passed from generation to generation where it will impact their life. At some point, your kids won’t be able to buy any beer at all, because they are continuing to pay for the beer that you drank in years before. As well as the interest on the IOU. And at some point, I may just have to cut you all off as a group because you owe me too much.

    So now the ninth and tenth richest men at the bar push for paying as little as possible – they want the tax cuts ! – and the benefits of the lower bill will go directly to them. They won’t ever pay the IOU – that is someone else’s problem – and they really don’t care about the next generation and their ability to buy beer.

    The truth is – it was all about them. The ninth and tenth richest men were so focused on paying the bartender as little as possible each week, that they didn’t realize that their greediness and short-term thinking would eventually shut down the whole system and close the bar.

    In the end, the bartender stopped accepting IOUs form the group and the credit dried up. He started by firing half of his waitresses since there were fewer customers to serve. In the end, he couldn’t pay his bills to the supplier and had to go out of business. And this left the nine and tenth richest men with no friends and no place to go out to each week.

    And the ninth and tenth richest men looked at each other and said –

    “How could this possibly have happened?”

    “Could my selfish tax cuts and foolish spending policies over the past eight years have contributed to this?”

    And they sat there as if they didn’t know the answer.
    And they STILL asked for more tax cuts, because they couldn’t think of anything that was be beneficial for the group.

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