Our Tax System Explained: Bar Stool Economics

Got this story the other day following the election

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 got' '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

Having Fun With Your Tax Dollars

They get to tax you, fund politically unpopular programs and wars, permit oligarchs to profit from inflation and now they get to charge fun and frolick on your dime.

From Hope Yen, Associated Press:
WASHINGTON - Federal employees charged millions of dollars for Internet dating, tailor-made suits, lingerie, lavish dinners and other questionable expenses to their government credit cards over a 15-month period, congressional auditors say.

A report by the Government Accountability Office, obtained Tuesday by The Associated Press, examined spending controls across the federal government following reports of credit-card abuse at departments including Defense, Homeland Security and Veterans Affairs.

The review of card spending at more than a dozen departments from 2005 to 2006 found that nearly 41 percent of roughly $14 billion in credit-card purchases, whether legitimate or questionable, did not follow procedure — either because they were not properly authorized or they had not been signed for by an independent third party as called for in federal rules to deter fraud.

For purchases over $2,500, nearly half — or 48 percent — were unauthorized or improperly received.

Read the rest of the story here

It's bad enough the government has the privilege of confiscating our personal incomes and charge taxes on fuel and communications. Making the kind of purchases described in the article should be treated as the crime it really represents - theft of the American people's money.

If you rob a bank or your local 7-11 store, you go to jail. Period. End of discussion. A U.S. Dept. of Agriculture employee was sentenced to 21 months in prison for using her privilege to pamper her boyfriend. This is how all of these cases should be dealt with, but unfortunately this isn't the case.

As the government gets bigger, it becomes more difficult to reign in abusive behavior by individuals working for it. Some of the behaviors came from the Department of Homeland Security, a relative newcomer to the Leviathan, we know as the federal government.

Is it any wonder the Founder of this country stressed for small, limited government?