Bar Stool 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, here's what happened next...

Those ten men drank in the bar every day and didn't question or even think about 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 six of the men 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 would be better off than before, and now five (instead of the just first four)  would 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 did!"

"That's true!!" shouted the seventh man: Why should he get $10 back when I got only two? The rich guys 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 then surrounded the tenth man 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.

Tax citizens too much, or attack them for making more money, and they just may not show up anymore.

In fact, they might start drinking overseas where the atmosphere is somewhat friendlier.


Footnote: Delegate Kump continues to advocate on behalf of the principles of economic freedom,  Constitutional liberties, and personal accountability. As long as he continues to breathe in and breathe out, he will stand where he is planted, striving to serve and protect those principles.

-West Virginia Delegate Larry D. Kump, District #59 (Berkley-Morgan counties)
Visit www.LarryKump.us & www.LarryKump.com for more about good governance issues.