This has been around awhile...

Understanding our tax system

EXPLAINING OUR UNITED STATES TAX SYSTEM WITH 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 beers 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 very important....they didn't have enough money between all of them for even half of the bill!

And that 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.


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

agreed. ive seen this in a restaurant setting. ( not using beer) and it fits. they take their money elsewhere, btu the debt doenst change. it gets refigured. amongst less people. cost per person by default is higher

Well if that was the case with the tax system it would make sense.
It may be the case in canada or somewhere else, not the US.
The premise for taxing the wealthy less is something like this - If we give all our $$ to the rich, maybe they will give us some work.
That may actually be an idea for businesses, it certainly doesn't work for CEO and bankers who essentially aere just empoloyees - just employees that have used the best crony capitalism to get to that position and get paid millions cos its their friends who decide what they are paid, and they get taxed @ 1/3rd the rate of the normal working stiff.

Seriously I think a ceo take home pay should be capped @ 25 X the average workers salary. Remember again, not a business I am talking about, its a company, public and owned by the general population - not a business. A corporation.

Cool.
Buddha.

You did a great job illustrating our tax system that pits people against each other when they should be getting along.  All for the benefit of the government, of course.

If you want to see just how much influence beer has had on human history, watch "How Beer Saved The World".  It's MIND BLOWING!

http://www.youtube.com/watch?v=2NXWrHZAs9g 

Oh yea in the case of a CEO, guy #10 was basically stealing from the other 9 ... so when they beat up the guy and he didn't show up the next day, they found out they had to pay more but well they also found they had a lot more extra $ ...

Rough example but pretty applicable where a company loses tons of $$$ like MF global and the CEO takes home 12 mill.

Cool.
Buddha.

Quote from: The Buddha on December 22, 2011, 11:07:32 AM

Rough example but pretty applicable where a company loses tons of $$$ like MF global and the CEO takes home 12 mill.

Right there is a good spot for an addendum or replacement to your prior CEO cap suggestion.

On a year where "the company" loses money, the CEO gets zero bonuses, stock, or anything else.

Quote from: Phil B on December 22, 2011, 11:50:04 AM

Quote from: The Buddha on December 22, 2011, 11:07:32 AM

Rough example but pretty applicable where a company loses tons of $$$ like MF global and the CEO takes home 12 mill.

Right there is a good spot for an addendum or replacement to your prior CEO cap suggestion.

On a year where "the company" loses money, the CEO gets zero bonuses, stock, or anything else.

That leads to the neat little accounting tricks like Bear stearns and lehmann bros. They were extremely profitable for years and one day they were worthless.
Cool.
Buddha.

Quote from: The Buddha on December 22, 2011, 11:07:32 AM
Oh yea in the case of a CEO, guy #10 was basically stealing from the other 9 ... so when they beat up the guy and he didn't show up the next day, they found out they had to pay more but well they also found they had a lot more extra $ ...

Rough example but pretty applicable where a company loses tons of $$$ like MF global and the CEO takes home 12 mill.

Cool.
Buddha.

unfortunately thats legally forceable. ( theyre paid by contract usually. whether you like it or not.

Found on the web...

HOW THE BAILOUT PACKAGE REALLY WORKS

It is a slow day in a little Greek village. The streets are deserted. Times are tough. Everybody is in debt, and everybody lives on credit.

A rich German tourist drives into the village and stops at the local hotel. He puts a €100 note on the desk, telling the hotel owner he wants to inspect the rooms upstairs in order to pick one to spend the night.

The owner gives him some keys and, as soon as the visitor has walked upstairs, the hotelier grabs the €100 note and runs next door to pay his debt to the butcher.

The butcher takes the €100 note and runs down the street to repay his debt to the pig farmer.

The pig farmer takes the €100 note and heads off to pay his bill at the supplier of feed and fuel.

The guy at the Farmers' Co-op takes the €100 note and runs to pay his drinks bill at the tavern.

The publican slips the money along to the local prostitute drinking at the bar, who has also been facing hard times and has had to offer him "services" on credit.

The hooker then rushes to the hotel and pays off her room bill to the hotel owner with the €100 note.

The hotel proprietor then places the €100 note back on the counter so the rich traveller will not suspect anything.

The traveller comes down the stairs, picks up the €100 note, states that the rooms are not satisfactory, pockets the money, and leaves town.

No one produced anything.

No one earned anything.

However, the whole village is now out of debt and looking to the future with a lot more optimism.

And that, Ladies and Gentlemen, is how the bail out package works!!

haha nice. some would try and tax that 100 once. some ten times lol. but a good story, will have to remember that.

You would think that that 100 story is how the bailout worked ... you'd be wrong.

This is how it worked.

The store went on well till it got to the hooker. The hooker said ... I've got these 10 johns who're worth 1000 each, but the "Mark to market" rule forces me to write them in as $10 each cos they think 10 bucks is cool for my "work" ... so if you suspend the Mark to market rule, I'll pay ya a 100 as an IOU which you can then say is good ...

Cool.
Buddha.

Quote from: mister on December 23, 2011, 11:22:23 AM
HOW THE BAILOUT PACKAGE REALLY WORKS

It is a slow day in a little Greek village....

Well, I don't see the connection here to the bailouts.   In the little Greek village everyone is even on the balance sheets and the 100 note is merely an enema which clears the accounts.  And the German tourist gets his money back.  In a Greek bailout they don't pay down their debt -the Government owes more than it's owed- and you don't get your money back 

Quote from: Gisser on December 26, 2011, 01:23:01 AM

Quote from: mister on December 23, 2011, 11:22:23 AM
HOW THE BAILOUT PACKAGE REALLY WORKS

It is a slow day in a little Greek village....

Well, I don't see the connection here to the bailouts.   In the little Greek village everyone is even on the balance sheets and the 100 note is merely an enema which clears the accounts.  And the German tourist gets his money back.  In a Greek bailout they don't pay down their debt -the Government owes more than it's owed- and you don't get your money back 

It's a joke, dude 

BTW if anyone wants to know how greece is nearly killing the euro when they are supposed to have got their financial house in order before joining the euro ... wait for it ...

Goldman Sachs helped them hide their problems.

Cool.
Buddha.

One thing to add here -
Anyone who thinks government is worse than private corporations really has their head so far up their a$$$es they are seeing daylight out of their mouth.

Government is bad, wasteful, stupid and clueless. However they stop stealing from you once you go broke.

Private companies will, after you go broke see if they can sell your organs on the black market, and claim there is so many broke people selling organs that your organs are worth 10c each, and the service charges are $1500, so after selling your organs you'd have to pay them 1499.90.

Cool.
Buddha.

Understanding our (US) tax system...with beer

It takes a lot more than beer for me to get my head around Our tax system.

Some huge corporations owe billions yet don't pay interest or fines and are given "time to pay" on the other hand someone like me who might owe a few grand gets fined for being a day late, Damn! that reminds me I have a payment due shortly. 

Quote from: Cal Price on December 28, 2011, 07:56:10 AM
Understanding our (US) tax system...with beer

It takes a lot more than beer for me to get my head around Our tax system.

Some huge corporations owe billions yet don't pay interest or fines and are given "time to pay" on the other hand someone like me who might owe a few grand gets fined for being a day late, Damn! that reminds me I have a payment due shortly. 

Happens in the US too.
Cool.
Buddha.

yup take donald trump for example. if he were to say f%$k you to his creditors, a bank or two would go belly up

Yeah! They are called "Sweetheart Deals" here, I suppose it sounds better than "Bent or dodgy deals" It is claimed that if Vodaphone coughed up everything that is due we could pay everything off.......some chance.