An AMAZING anology describing the taxation between rich and poor.

Stumbled on this on the internet. I just had to share.

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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 ball.

“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 men would now cost just $80.

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Yea, that is just a ridiculous analogy.

First off, you can't simplify it into mere decile. The top .1% can begin to influence political policy, hire creative accountants to earn further tax reductions, and find loopholes to hide monies in offshore accounts. I bet they can do much more, depending on how knowledgeable they are.

Honestly, a flat tax of 20% across the board, with NO tax loopholes should suffice any government. If it doesn't, figure out where the bloat is and cut the most useless programs.

The current system is far too complex to say any which side is being unfairly oppressed. It depends on one's knowledge-base, intellect, and particular set of circumstances to what extent they will even be capable of exploiting the system.

reply to post by CleanCare


I hope you're not comparing this to the American tax system because that's not how it works at all.

Pick up any enrolled agent study guide and you will understand what I mean.

Also pick up a corporate law book and finance...

While you're at it, accounting and cost accounting as well.

If you don't know what I'm talking about then you are thinking exactly as the people who benefit from this system want you to.

Did you get this from the John Birch society page?

That is a useful analogy But:

The tenth man, the richest actually pays 0 tax. These are the massive corporations who always get out of taxes and yet seem to still get government handouts especially when they stuff up big time.

It is only the slaves that pay taxes.

P

reply to post by webedoomed


Wow, really? Did you read the OP? When the bartender reduced the bill by a FLAT amount, that is when the trouble started. I'm not saying a flat tax would be worse than what we have now, but think about the consequence of a flat 20% tax, and if it was raised by 1%. Reread the OP to see who gets the wet end of that plunger.

reply to post by pheonix358


Though I get your point, I think it's important to say that very few people in the tenth decile will pay little taxes. The majority of the top 10%, and even the top 1%, yes I'm saying the 1% ers.. will wind up paying the highest amount in taxes.

You try to get close to 0% without doing everything exactly correct, and watch the IRS go nazi all over your not-so-clever arse. Some corporations get away with it, but it's an exception to the rule.

reply to post by ScientiaFortisDefendit


You are having a clear disconnect in the reasoning presented.

The bill represents the taxes, and the discount represents a tax break.

There is no flat tax analogy in the OP.

Rich people crying about progressive taxation? REALLY!?

I don't even know what to say anymore. What a pathetic excuse for an argument.

"Wahhhhh I'm rich and I have to pay taxes! If you don't tax me less I'll take my money elsewhere!" Go for it. You are part of the problem, not the solution.

Numbers can say a lot of things depending on how you use them.

Suppose we take your scenario and say these ten men all worked at the same place. The amount they payed was based on a percentage of their check, the same percentage as the effective tax rate.

man one's pay was $0 (ok lets say less then a dollar to keep it fair)
man two's pay was $0
man three's pay was $0
man four's pay was $0
man five's pay was $100
man six's pay was $300
man seven's pay was $700
man eight's pay was $1200
man nine's pay was $1800
man ten's pay was $5900

I make no claims that those number are accurate in fact I doubt that they are but they're probable not wildly off either and they show the other side of the argument. Is man ten that much more valuable then the others? Does man ten work that much harder or produce that much more?

reply to post by CleanCare


Load of rubbish. It is no analogy at all. Tax is based on income not expenditure.
Plus these reductions are merely arbitrary amounts, there is no mathematical formula behind it.
Third, tax reductions are not applied equally to all. In the UK the poorest are paying more tax whilst the average tax amongst those who earn over 1 million will be reduced by about 100,000 - how is that fair?

You have been hoodwinked by right wingers who want to manipulate you.

yeah that analogy is a bit too simplistic to relate it to the real world.

What I don't like(and I by no means am I rich, but at the same time I'd say by no means am I poor), is that as an electrician the more I work overtime obviously the higher tax bracket I go into. I find it hard to fathom, that me as an electrician if I had a big week of overtime and worked say 70 hours that week and earned say $3000(take home about $2000), then the bloke next to me say a division manager has worked 40hrs and earned $3000(take home $2000), then why should I(or anyone for that matter) have to pay as much tax as the divisional manager when I've had to work almost twice as many hours?

There needs to be some type of consideration for how many hours a person has worked to get their money. Like Actors, say they work 3months 6hours a day on a job/set and earns a million dollars, and some other guy works 3 good jobs for 18hours a day for 3 months and earns 1 million dollars(hypothetical situation of course), then why on earth should he have to pay as much tax as someone who has worked 1/3 of the hours he has. Anyway considering the already ridiculous tax systems in most western countries, I think work hours have to be taken into consideration.

IMO if the taxes were lower(below 15%), then I don't think the rich should have to pay anymore(% wise) than everyone else, in saying that I also believe that there must still be a cut off for the poor, so that if you earn below 35K'ish then you should not have to pay any tax.

I don't know but the whole system is screwed up, when I look at my wage on a big week of working 70+ hours and see that Ive just given the government $1000 of my $3000 I get pretty pissed off considering how hard I've had to work(and the sacrifices made that week having barley anytime to myself) and the government benefits from me overworking myself, screw them.

It's not amazing, and it's not even remotely close to a fitting analogy.

A more fitting analogy would include the fact that half of those men wouldn't leave the house due to a lack of disposable income... especially for beers at those prices.

While it's cute to take absurd figures and scale them down so few people actually understand how expensive (relative to income) that tab would be for most, it's not truly reflective (or accurate) at all when the bigger picture is taken into account. Most of those men already spent all of their meager full-time working income on housing, food, and utility bills. A couple more used credit and went further into debt to cover their bills for the month. That 6th man paying "$3" for "beers", not a chance... that's blowing a few month's rent for one night out on the town.

reply to post by CleanCare



This thing has been on the net so long I'm surprised there's anything left to stumble over!

And here, once again, is my response:

posted (originally) on 7-11-2008 @ 10:22 AM this post Oh, For The Love Of....!


This is the most shocking example of mathematical illiteracy I've seen in a very loooong time!

And I've dealt with A LOT of math Illiterates! (Most of them CPA's!)




Very well, School's in session. Pay attention.


10 people. Bar tab for beer= $100


If each paid an equal amount (Fair Share) towards the Tab, each would owe = $10

10 people X $10 = $100



However, per the provided example, 4 of those folks were required to pay nothing, therefore: 10-4= 6.

6 people were left to pay a $100 beer tab.


If each of the remaining 6 drinkers were to pay the same amount toward the bill, each would have owed approximately $16.67

$100/6 = $16.666666666... (rounded off to : $16.67)



Now, instead of dividing up the bill equally amoung the remaining 6 drinkers, they decided to pay based on their perceived ability to afford the expense. The named "Professor of Economics" thusly likens this method to the current income tax system.


Therefore the break down of the original $100 dollar tab looked like this:


Drinkers 1-4 pay - $0 or 0% of the tab
Drinker #5 pays - $1 or 1% of the tab
Drinker #6 pays - $3 or 3% of the tab
Drinker #7 pays - $7 or 7% of the tab
Drinker #8 pays - $12 or 12% of the tab
Drinker #9 pays - $18 or 18% of the tab
Drinker #10 pays - $59 or 59% of the tab

Total $100 or 100% of the tab



Got that?
Pay attention to the Percentages
paid by each of the drinkers. This is where the good Dr. Kemerschen "falls off the wagon"!


In the example, the barkeep, in a show of generosity, gives the drinkers a $20 "rebate". This effectively reduces the beer tab to $80 for the 10 drinkers.

$100 - $20 = $80


Of course, since 4 of those drinkers didn't pay anything in the first place, the remaining 6, paying customers are left to divvey up the windfall.

If the drinkers would have stuck to their original plan, as they devised for apportioning the bill, the split would have been easy;


Each payer would have received a portion of the refund equivalent to the portion (percentage) of the bill he paid. Thus:


Drinkers 1-4 paid $0 get $0 back final amount paid = $00.00
Drinker #5 paid $1 gets $0.20 back, final amount paid = $00.80
Drinker #6 paid $3 gets $0.60 back, final amount paid = $ 2.40
Drinker #7 paid $7 gets $1.40 back, final amount paid = $ 5.60
Drinker #8 paid $12 gets $2.40 back, final amount paid = $ 9.60
Drinker #9 paid $18 gets $3.60 back, final amount paid = $14.40
Drinker #10 paid $59 gets $11.80 back, final amount paid = $47.20
Original Tab $100 minus $20/20% rebate = final tab $80.00




The good doctor tried to mislead us into believing in the inequity of the tax system by erroneously attempting to equally divide the $20 refund offered amoung 6 recipients, when, in fact, those recipients, by virtue of the fact that they had not equally contributed to the expense (the original bar tab, or by analogy, the income tax) were not equally entitled the same refund.


The tax system does not work that way.

Our tax system is geared such that the more you make, the more you (should) pay. And the more you have paid, the more you should get back, when it is due.


Ah well, I guess it is true;

PHD = Piled Higher, Deeper!

This thing keeps coming back, year after year

As regular as taxes!


Guess they figure you can fool some of the people each time.

while we are throwing around fictional hypothetical situations why don't we also pretend that rich man owns the brewery company and is making $9 off every $10 beer, well he's still pretty much not out of pocket at the end of the day.

CleanCare
Stumbled on this on the internet. I just had to share.

------

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 ball.

Here's a better analogy for the alleged $100 in beer;

The first four men (the poorest) pay $10 each
The fifth would pay $15
The sixth would pay $17
The seventh would pay $20
The eighth would pay $25
The ninth would pay $10 (because he has good accountants)
The tenth man (the richest) would pay 0%
So, that’s what they decided to do and the bartender paid the 10th man $27 for bringing them all in and keeping them drinking.

That's a bit more realistic ;-)

Cheers - Dave

reply to post by CleanCare


Overseas? Hmmm, in fact many of those tax dollars are hidden "overseas" at this very moment.
Off Shore Accounts, held by those who still want all the benefits The United States of America
has to offer.
Overseas? I'll tell you what, I know of a series of Islands off the coast of Japan, as well as
the same off the coast of the Phillipines. Regardless, both are located in the disputed territory
of the South China Sea. You are free to move your asses there immediately.
A word of advice, use your well guarded tiddly winks to purchase your own Subs.
Good Luck, and Good Riddance.

reply to post by webedoomed


Well said.
Well Pondered.

reply to post by OrphanApology


Amen to that.
Stay Sane.

reply to post by pheonix358


Well hot damn!
You called that right,
Right On.