I don't like Obama

Explaining our tax system with beer
For those who understand, no explanation is needed.

For those who do not understand, no explanation is possible.
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 beers 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!' '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 very 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 DO get the most benefit from
a tax reduction. They also PAY more than the rest. 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
Michigan State University