Tax system explained by beer?

[Certified Public Angler]

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 every body'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, 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.

[fishinfiend]

Unfortunately, this does not make sense to some people.

[atx_newbie]

Except that poorer people get more of their income taxed, since they are not able to save nearly as much of their earnings.  Example:  me, I can't save but about 5% of my income, so I get taxed on 95% of my income.  But someone who makes $1 million, and saves 30%, only gets taxed on 70% of his income, even though in a much higher tax bracket.

The whole system is flawed.  Taxes is one of those things that should never be discussed in places such as this, because no matter what, someone is going to get offended and upset by something.  But I don't think that a flat tax solves the problem, at least not until the government gets down to a manageable size

[frogtog]

Yep I am trying my best to one of the first four. ;D

[pokey]

A buddy just sent this to me:

RETIREMENT PLAN INVESTMENT TIP

If you had purchased $1000.00 of Nortel stock one year ago,

It would now be worth $49.00.

With Enron, you would have $16.50 left of the original

$1000.  

With WorldCom, you would have less than $5.00 left.

If you had purchased $1000.00 of Delta Air Lines stock you

Would have $49.00 left.  

If you had purchased United Airlines, you would have

Nothing left.

But, if you had purchased $1000.00 worth of beer one year

Ago, drank all the beer, then turned in the cans for the

Aluminum recycling refund you would have $214.00.

Based on the above, the best current investment advice is

To drink heavily and recycle.

This is called the 401-Keg Plan  

[atx_newbie]

A buddy just sent this to me:

RETIREMENT PLAN INVESTMENT TIP

If you had purchased $1000.00 of Nortel stock one year ago,

It would now be worth $49.00.

With Enron, you would have $16.50 left of the original

$1000.

With WorldCom, you would have less than $5.00 left.

If you had purchased $1000.00 of Delta Air Lines stock you

Would have $49.00 left.

If you had purchased United Airlines, you would have

Nothing left.

But, if you had purchased $1000.00 worth of beer one year

Ago, drank all the beer, then turned in the cans for the

Aluminum recycling refund you would have $214.00.

Based on the above, the best current investment advice is

To drink heavily and recycle.

This is called the 401-Keg Plan

Now that is some financial advice that even I can understand!!!

[flechero]

No need for my rant.  Sufficed to say I'd like to see some tax cuts in my bracket.

But I do like beer!

[atx_newbie]

I just wish I made enough money to be able to complain about being overtaxed  ;D

[flechero]

I just wish I made enough money to be able to complain about being overtaxed

See your first post above. ;D

You can easily fix that... it just takes time and effort. Maybe even a little sacrifice.   Very few of us were born with a silver spoon.

[Certified Public Angler]

anyone who receives a legal paycheck can complain about being overtaxed.  ;D

I wish they just reported the check amount so I didn't have to see the other amounts adding up.  

[Root beer]

Actually, enron would've been a helluva stock if they had chose to be an ethical firm.

I'm still awe about how enron did it. Really show you how smart the IRS and the SEC truly is.