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Bar Room Economics
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, 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.

David R. Kamerschen, Ph.D.
Professor of Economics
University of Georgia

For those who understand, no explanation is needed.
For those who do not understand, no explanation is possible.
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First of all I love the arrogant implication not everyone “gets it”. Typical of conservative thinking it points out the fatal flaw in the right wing world view – the inability to consider any other viewpoint but their own. 

Many conservatives use the expression, “If you open your mind too much your brains will fall out”. On the other hand, if you don’t open your mind at all no thought will get in. In a group that admires excess with their hummers, huge houses and ceaseless complaints over tax bills I wonder why conservatives are content with so few ideas. 

To be honest if you look at the statistics it does look as if the wealthy do pay more in taxes. In 2003 the Congressional Budget Office published estimates of the distribution of taxes and income between 1979 and 2000. The Brookings Institute analyzed the results and had this to say, “The share of taxes paid by the top 1 percent rose by 66 percent, from 15 percent in 1979 to almost 26 percent in 2000, because their share of pretax income almost doubled, from about 9 percent in 1979 to about 18 percent in 2000?. Please note, the 26 percent is the share of all taxes paid by the very wealthy, not the individual tax rate. So why do the rich pay so much of the tax burden?

In the same article it goes on to say, “After-tax income tripled among the top 1 percent, and roughly doubled in the top 5 and 10 percent. After-tax income rose by 15 percent or less in the bottom 60 percent of the distribution. The ratio of after-tax income among the top 1 percent to those in the middle quintile rose from about 8 to 1 in 1979 to more than 20 to 1 in 2000?. It’s quite simple, the rich pay more of the taxes because they make most of the money. Not more of the money, most of the money.

But yeah, that eighteen year old single mother working two jobs at minimum wage so she can barely make the rent on a one bedroom apartment in a crappy neighborhood, pay for day care and somehow buy the groceries – she should quit her whining and start paying her fair share.

Tags: conservative, fairness, tax, taxes, wealthy