The Tax System Explained Through Beer
(Editor’s Note: A long-time pal suggests this would be a worthy topic on Capitol Weekly’s “Politics on Tap,” as well.)
Every day, 10 men go out for beer. The bill for all 10 is comes $100.
If they paid their bill the way Americans pay taxes, 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 and the ninth would pay $18.
Since the tenth man is the richest he picks up $59 of the tab. So, that’s what they decided to do.
This arrangement worked well for the 10 men who continued their daily quaffs at the bar.
Then the owner decided to reward them for their loyal patronage.
“Since you are all such good customers,” he said, “I’m going to reduce the cost of your daily beer by $20.”
Now drinks for the 10 men would cost $80.
The group still wanted to pay their bill the way Americans pay taxes.
There was no change for the first four men — they still drank for free.
That meant the six paying customers had to divvy up the $20 windfall.
They wondered how best to divide it so everyone got 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 more equitable to reduce each man’s bill by a higher percentage, the poorer he was.
That methodology more closely followed the tax policies of the Untied States.
His proposed calculations for the six paying customers were as follows:
The fifth man, like the first four would now paid nothing, a 100 percent saving.
Instead of $3, the sixth man now only paid $2, a 33 percent reduction.
The seventh now paid $5 instead of $7, a 28 percent savings.
As for the eighth man, he received a 25 percent reduction from $12 to $9 and a 22 percent for the ninth who now paid $14 instead of $18.
There was also a break for the 10th man who now paid $49 instead of $59, a 16 reduction.
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 dollar out of the $20 saving,” declared the sixth man. He pointed to the 10th man, “but he got $10!”
Said the fifth man: “Yeah, I only saved a dollar too. It’s unfair that he got ten times more benefit than me!”
“The seventh man also agreed: “Why should he get $10 back, when I got only $2? The wealthy get all the breaks!”
From the four men who paid none of the bill under both the old tax system and the new one created by the bar owner.
“Wait a minute. We didn’t get anything at all. This new tax system exploits the poor!”
So the other nine men surrounded the 10th and beat him up.
The next night the 10th man didn’t show up for drinks.
So the nine sat down and had their beers without him.
But when it came time to pay the bill, they discovered something important.
They didn’t have enough money between them for even half of the bill!
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