• RSS Ludwig Von Mises Institute of Austrian Economics

    • An error has occurred; the feed is probably down. Try again later.
  • RSS Republican Liberty Caucus

    • An error has occurred; the feed is probably down. Try again later.
  • RSS Freedom Watch

    • An error has occurred; the feed is probably down. Try again later.
  • RSS Free Talk Live

    • FTL Digest 2017-03-25
      Free Talk Live's Daily Digests feature highlights from our full-length seven-day-a-week live radio show, selected and edited by Riley Blake. Enjoying the digests? Please donate $5-10 per month to Riley via this link: https://www.patreon.com/crblake86 If you want to donate via bitcoin, you can do so at the following address: 1NytDNA14UcYsvzX5DHhzowGCqNou […]
    • Free Talk Live 2017-03-26
      FTL's County First Sanctuary County in NH :: Voting and Political Participation Controversy :: Immigration Fears :: Sharia Law and ISIS :: Trump and Reading Between Lines? :: Welfare Numbers :: Government Corruption :: Bloated Bureaucracy :: Bitcoin Conflict :: AFTERSHOW! :: HOSTS - Ian, Mark, Jonny Ray
    • FTL Digest 2017-03-24
      Free Talk Live's Daily Digests feature highlights from our full-length seven-day-a-week live radio show, selected and edited by Riley Blake. Enjoying the digests? Please donate $5-10 per month to Riley via this link: https://www.patreon.com/crblake86 If you want to donate via bitcoin, you can do so at the following address: 1NytDNA14UcYsvzX5DHhzowGCqNou […]
  • RSS Break the Matrix

    • An error has occurred; the feed is probably down. Try again later.
  • RSS Schiff Radio

    • Obamacare Lives To Die Of Natural Causes – Ep. 237
       Earlier I talked about the Trump honeymoon, and  my belief that it wouldn’t last long, in fact I thought it might have ended before the marriage began with the inauguration It did carry on a bit after that, but it seems to me that the honeymoon is ending now Today, the attempt to repeal and […] The post Obamacare Lives To Die Of Natural Causes – Ep. 237 app […]
    • Why A BAT Will Clobber The Dollar – Ep. 236
      U.S. stocks ended the week with marginal gains In fact, the Dow Jones was up only about 12 points on the week The real action happened overseas Foreign markets were strong, particularly emerging markets They continue to smoke the performance of the U.S. stock market, confounding the experts The experts thought making America Great Again […] The post Why A BA […]
    • Fed Hikes Rates To Feign Confidence – Ep. 235
      Today the Federal Reserve raised interest rates for the third time in 10 years Of course, the tightening cycle began with the first rate hike in December of 2015 Followed by the second rate hike in December of last year And now, breaking from tradition, rather than waiting an entire year for the third hike […] The post Fed Hikes Rates To Feign Confidence – E […]
    • Trump Lauds Job Statistics He Once Impugned – Ep. 234
      I guess you could say a good jobs report is all in the eye of the beholder And when it comes to President Trump’s eyes, he is now beholding an excellent jobs report Whereas a candidate, similar reports were described by Trump as phony, a hoax I have a lot more sympathy for Candidate Trump […] The post Trump Lauds Job Statistics He Once Impugned – Ep. 234 app […]
    • Trumpcare: Different Plan, Same Problems
      By: Peter Schiff Friday, March 10, 2017 With his widely followed, and positively reviewed, address to Congress last week, President Trump showed how easy it could be to unite Washington around a big-budget centrist agenda on health care, immigration, taxes, infrastructure and the military. But the continued accusations surrounding his campaign’s alleged Russ […]

Bar Stool Economics

This has been a popular article being sent around via email and other new media sources, so I figured I’d share it here as a lesson about taxation:
http://www.wisebread.com/bar-stool-economics-0

Here’s the text of the article for your convenience:

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!”
“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, 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.

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: