# Other The Tax system, explained in beer?!

Discussion in 'General' started by Kalcifer, 18 Dec 2009.

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The Tax system, explained in beer.

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.

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.

But once outside the restaurant, the men began to compare their savings.

"I only got a pound 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 pound 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.

David ************, Ph.D.
Professor of Economics.

For those who understand, no explanation is needed.
For those who do not understand, no explanation is possible.

I was emailed this the other day, thought it was worth a post.

Last edited: 18 Dec 2009
Burnout21, Smilodon, Guest-16 and 8 others like this.
2. ### stonedsurdIs a cackling Yuletide Belgian

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May I be the first to say that's pure win?

3. ### Shurikensame christmas AV for a whole year

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+ rep for awesome post

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+Rep

Great post

5. ### CardJoeFreelance Journalist

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+ Rep. Awesome.

Really, we should just beat up the four poorest. Or give them shandy.

6. ### BedeMinimodder

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Actually we should only give a vote to the people who contribute money to the state, rather than civil servants and the unemployed (disabled and those who risk death for the state excepted).

7. ### supermonkeyDeal with it

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This allegory has made the rounds over here, with dollar signs instead of pound signs. What I find interesting is that the comments so far (from what appears to be mostly people living in the UK) show approval of the allegory. On this side of the pond, it is generally used by conservatives to argue against what they consider "Socialism" (i.e. redistribution of wealth (beer)).

Of course, the allegory doesn't give any mention of what the poorest 4 men do before heading to the pub for a pint with their 6 friends. Bede's comment alludes to the 4 men being unemployed, but they could equally toil all day long in kitchens, as janitorial staff, construction, or any one of the poorly paid social services fields.

The attribution is wrong, too. David ******, PhD, did not write the original article. In fact, numerous people named David - who are either professors or authors of tax-related material - have posted announcements on their websites that they are not the original authors.

On the surface it's a cute story, but I can't shake the feeling that there is really more to it than the simplicity presumes.

8. ### RTT#parp

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mmmmmmmmm beer!

9. ### VelesDUR HUR

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That metaphor was actually more confusing than the real explanation

10. ### lirathealSharing is Caring

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I read 'beer' and went to the pub.

+ rep for coaxing me into the pub, though.

11. ### unknowngamerhere

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Also what it failed to mention was the tenth man was writing it off as a billable allowance, and paid out of his company share deal which gets around income tax.

The rich have it good.
Lotsa tax breaks.
If they were better of they'd f()ck off and go elsewhere.
And they'd take thier heavy industry, manufacturing jobs and call centers with them.

BTW, it's not the tax system that made them f()ck off, it was globalisation.
Once it got cheap enough to import stuff, the exported the jobs to somewhere where they could pay less in wages.

12. ### thehippozWhat's a Dremel?

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lol =] that's what I got out of it.. it's a conservative view though like was said

beat up the 4 poor guys think it only happens the other way- envy

13. ### BlarteModerate Modder

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so all said and done ..beer makes you pick fights with rich folk?

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