Taxes - Ferrari Life
 
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post #1 of 7 Old 06-12-2008, 11:12 AM Thread Starter
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Taxes

Suppose that every day, the same ten men go out for a few beers 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 bar, the men began to compare their
savings.

'I only got a pound 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 pound, 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.


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

Archie
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post #2 of 7 Old 06-12-2008, 11:18 AM
 
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I really like the analogy...makes sense to me.

Breck
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post #3 of 7 Old 06-12-2008, 12:20 PM Thread Starter
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Someone e-mailed it to me today, It's very good, so I thought I'd share it with you.

Archie
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post #4 of 7 Old 06-12-2008, 01:17 PM
 
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Quote:
Originally Posted by archiegibbs View Post
Someone e-mailed it to me today, It's very good, so I thought I'd share it with you.
Well thanks, I got a kick out of it.

Breck
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post #5 of 7 Old 06-12-2008, 01:42 PM
 
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pretty good, archie, my father is going to love this!

so, are you the 10th man?

"When the going gets tough, the tough get going." - J. P. Kennedy
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post #6 of 7 Old 06-12-2008, 02:32 PM
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I'm the 11 man...the co-owner. I wan to know why my partner is giving away free drinks. Idiot...I'm gonna charge him the balance.

Lane

Previous owner of 348ts SS #64, Now Ferrariless
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post #7 of 7 Old 06-12-2008, 03:33 PM
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I have seen that before. The US tax system works the same.

Capt. Pete
'79 308 GTS, '82 Jeep CJ7 Jamboree
"Time is what prevents everything from happening all at once."
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