U.S. Tax System Explained With Beer

A brilliant explanation of the US tax system using actual percentages, the impact of a tax cut, and the public reaction that anyone should be able to understand.

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.

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

Reviewing Through the Storm

Through the Storm is a uniquely written composition penned by Lynne Spears, the mother of international superstar, Britney Spears. 

I call it a unique composition because, regardless of the author's intent, the book borrows from various literary genres resulting in an undefined category of its own. As such, it functions, not only as an autobiography, but also as a familial diary, an insider's memoir, a spiritual treatise, a self-help essay, a personal confession and even at times, a survivor's eulogy. Due to this curious amalgam, Through the Storm carries a chorus of voices which generalizes the demographic and gives the impression that Ms. Spears never made a definite decision as to whom she was writing. 

There are moments when the author directly tries to reach women like me: a wife and mother who hopes to avoid the pitfalls of indulging her children without crushing their inner potential; but then, all of a sudden, the narrative alters its aim and begins coaching the victimized woman of abuse and then switches again to, seemingly, beseech understanding from a future familial descendant. 

I felt like my identity was changing along with her focus which quite often left me feeling confused and disconnected from the narrative. I literally would have to shake my head and tell myself: Oh wait, I'm no longer the Christian woman looking for proof that Lynne is really a sister in Christ, I'm now one of those nosey tabloid readers who wants to hear the inside scoop on what Britney was really doing behind the scenes.  This constant shift in audience-focus disjointed her story, but that's not to say I wouldn't recommend the book to others. Lynne's perspective is far too interesting and insightful for people to pass up just because of something as trivial as faulty audience development. 

Through the Storm is a candidly raw, transparently hopeful, and victorious lesson for everyone to embrace. Overall, I say kudos to Lynne Spears.

May I Call You Crow?

I just finished taking a shower to wash away all of the nervous sweat I accumulated on my body after watching the Vice Presidential debate. It wasn't a train wreck per se, but it was disconcerting to watch a plebeian try to take on an aristocrat who tried to act like a plebeian being attacked by an aristocrat who was cloaked in plebeian charm. Are you confused? Who wasn't?

Biden forgot he was in a silk suit as he invited America to walk over with him to the Home Depot... you know, the one he supposedly frequents. And who coached him to talk so fast? The only time he slowed down was to emphasize disparaging remarks about McCain directly into the camera... repetitively. All that other less important stuff, like policy peppered with big numbers, came rushing out of his mouth in a mass exodus.

Then there was Palin who caused me to cringe the moment she firmly asked the Senator: "May I call you Joe?" Bold, yes, good choice, no-siree. It was a debate, not a back-yard picnic. When that happened at the top of the show I thought, "Oh, boy, this is going to be uncomfortable to watch." And uncomfortable it certainly was! Someone needed to tell Palin that a tough tone on its own does not a good sentence make. But there she was, launching forceful witticisms and campaign slogans back in Biden's face as if to suggest a superior point had been made. 

It's a shame to say, but the most admirable performance in the debate came from the mediator, Gwen Ifill. Her questions and comments were spot on and despite predictions, I didn't sense an ounce of bias in favor of the Obama / Biden ticket. In fact, I thought she seemed to extend an obvious tilt of graciousness towards Palin at certain moments in the debate when she could have otherwise thrust a devastating inquest. 

Like the numerous times when Palin ignored the question Ifill asked and threw her own topic on the table for discussion instead. The first time that happened, Ifill made a pointed remark about it, but subsequent repetitions of the same snub from Palin were otherwise left unchallenged. Now, don't get me wrong, I'm not necessarily holding Palin in complete contempt for her routine of topical-hijacking. I'm sure she was just trying to prove that she refuses to cave in to the regiment of "politics as usual" but my point is this: Sarah Palin is lucky Gwen Ifill didn't make a huge issue out of it and call her to task right then and there on national T.V. I think we need to give Ifill the monicker of Gracious Gwen from here on out. 

As for dear Joe, I have got to say, I walked away from the debate liking the guy! How the hell did THAT happen? If the stars should align just right and he doesn't become the next VP, he definitely needs to go into acting. He's got a likable personality, regardless of the bunk that falls out of his mouth, and it's for this reason alone that I'm beginning to think Obama and Biden are going to win. I just don't see America giving up on the professional purveyors of sophisticated politics. To put it in Wasillian terms: those boys have got too much spit and shine on their side not to win.

There's no getting around it, we're a country who likes to be dazzled. We would much rather elect a platitude of change instead of actually suffering through the genuine alterations that have to be made in order for change to take root. We'll take the glamour of trendy ethics wrapped in Hollywood posh over the grime of moral principle covered in Old Fashioned work any day of the week!

Even I, a strong supporter of the McCain /Palin ticket, had to turn off the debate 15 minutes before it was finished out of sheer tedium over hearing the word "maverick" for the 100th time. If I couldn't hang in there and listen through that final burst of assertive energy from my own VP candidate, then how the heck could anyone else sit through it and be moved? 

I can't wait to wake up tomorrow and read what the pundits have to say. I thought Palin made a good gameplay when she halted the "he said she said" sling- fest by suggesting they let the analysts sort through the records for them. It'll be interesting to see who got their information right and who tripped up on the facts. 

Dollars to donuts, I bet someone will have to eat crow.

 

Short and Sweet

I want to tell you about my relationship with my sister, Megan. 

Growing up, the only thing we shared in common was our mom. We had different fathers, different personalities, different types of friends, and different outlooks on life. The core of these differences could be summed up by this short comparative list:

Cara ------------ Megan

intense................   calm

methodical..........  unstructured

analytical............   emotional

argumentative....  agreeable

ideological..........  relational

complicated........  straightforward  

When I invited her to read my first post, she responded by telling me that she enjoyed it but couldn't understand why I had to use so many words to write it. She made the same kind of observation on my last post. She said: 

"You should have just written: Vote for McCain... Obama is stupid."

That's my sister. She cuts through the barrage of verbal excessiveness and zeros in on the central tag-line. Nothing fancy, nothing contrived, just plain and to-the-point. 

 

That's why I'm so glad she's my sister. Everybody needs a person in their life who is completely different than they are. The contrast makes you own-up to your own crap, if you let it. 

As the two of us have gotten older, our love for one another has outfaced our obvious differences and for this, I am very thankful. I have benefitted greatly from allowing her list of traits to soften the effects of mine and I think she would say that there has been some positive transference from mine to hers as well. 

Hold on, who am I kidding. What she would actually say is something like this: 

"I'm stronger... you're nicer."

And that's the truth, short and sweet.