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…

http://www.ijreview.com/2012/04/688-tax-system-explained-beer/

At first glance I thought this thread was "Beer and Texas" My first reaction was YEE HAW!!!

It would have to be very large beer!

The original article is no longer on the internet, but here's a synopsis. http://lpcolorado.blogs.com/lpcolorado/ ... tax_r.html


There is more than one tax, to act as if there is only one tax is dishonest.

I would say this article has a lot to do with the carbon and mining taxes.
The government is going a little too green and any one with a pickaxe is footing the bill. They will probably move their companies over seas where it is cheaper and australia will lose out.

Edit: There was an add up the top for "The australian" I didn't read the url... It still makes sense to me that way though.

Yes, we have beer in Texas!

shiner and lone star for sure

Since it is no longer available ...


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 ball. “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 men would 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 ? 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 a h higher percentage the poorer he was, to follow the principle of the tax system they had been using, and he proceeded to work out the amounts he suggested that each should now pay.

And so the fifth man, like the first four, now paid nothing (100% saving). The sixth now paid $2 instead of $3 (33% saving). The seventh now paid $5 instead of $7 (28% saving). The eighth now paid $9 instead of $12 (25% saving). The ninth now paid $14 instead of $18 (22% saving). The tenth now paid $49 instead of $59 (16% saving).

Each of the six was better off than before. And the first four continued to drink for free. But, once outside the bar, the men began to compare their savings.

“I only got a dollar out of the $20 saving,” 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 benefit than me!” “That’s true!” shouted the seventh man. “Why should he get $10 back, when I got only $2? The wealthy get all the breaks!”

“Wait a minute,” yelled the first four men in unison, “we didn’t get anything at all. This new tax 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 their 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 government ministers, is how our tax system works. The people who already pay the highest taxes will naturally 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.

I drink Shiner beers, won't touch that Lone Star...

hehe... i don't drink any beer... i know i have never had shiner and to the best of my recollection, never tried lone star either ... the last time i had any beer was a blue moon at smokey bones bbq

I follow the Trappist rule myself...

I urge you to delete at least this part. David R. Kamerschen is a real economist, but he did not write this and has repeatedly denied writing it. Another economist gets it ascribed to him, but that was a mistake. He handed it out, along with other perspectives, to provoke critique and debate and is not the author. It may have been a letter to a newspaper.

http://www.snopes.com/business/taxes/howtaxes.asp

So, knowing this, it becomes dishonest to ascribe to it a false authorship that gives an air of authority.


Further, as Bombadil pointed out, when one looks at the total tax burden and not just the income tax, taxes are roughly equal throughout 20,000 to 500,000. Those making less often get welfare if independent and those making more get a larger share, on average, in capital gains which has a low tax rate. Further, they are able often to avoid state income taxes on the capital gains.

The average schmoe making barely above minimum wage is paying 40% in taxes, and outrageous figure. That the tax rate on those making more is also too high, at least arguably, does not justify the medacity of attacking the poor as those who "pay no tax" when, in fact, they pay twice as much, proportionately to their income, as most billionaires do.

Lone Star hasn't been brewed in San Antonio for quite a while, nor Pearl.

I wonder if it can still rightly be called the national beer of Texas.

With all due respect, this is not quite correct.

As someone who's gone from near the bottom of the economic ladder to significantly better, I paid almost zero in taxes when I was at the bottom. Granted, each pay check had 30+% removed, but when I filed my taxes I got 95% of that back; in essence I paid zero taxes.

So when one says the poor "pay no tax", they don't and they do. They pay today but get it all back tomorrow. In fact, there are people who are very poor (with children) who get more back than they paid - its called the Earned Income Tax Credit (EITC).

In reality I also just "mispoke" above. Nobody is attacking the poor - those of us who are upset are attacking the system which unfairly taxes those who are producers and earners in society. Its not the poor's fault the system takes, as a percentage, less of their pay than mine (once tax returns are factored). Heck, I get it and to some degree support it (progressive tax system). If I had my druthers, nobody would pay any taxes up to the first $80,000 of income and only a flat 10% for income above that level (no deductions for any reason for anybody).

I have 6 childen, one with speical needs and very high medical bills. As someone who paid over $XX,XXX in federal income taxes alone last year, I can assure you: we aren't rich, don't live like we're rich and could have used a few of those tax $$'s back to cover expenses.

You never paid sales tax, social security taxes, medicare taxes, car registration, property taxes, ad nauseam that whole time? That is pretty atypical. And most of those are regressive, not progressive.

The average person making 20,000 or more pays 35-45% of his income in taxes when all is said and done. That you formed a freak exception is not challenge to that. Bombadil gave a link, which you did not address.

For goodness sake, Warren Buffet (if we are going to use anecdotes) paid less, as a percentage, in taxes than I did last year, and he has never produced squat. He is a financier and "investor"

In anycase, the OP and the sham of a journalistic source he linked should not do something so dishonest as ascribe this, whatever its value, to an actual economist who did not write it.

I was speaking about Fed income taxes only. I was wan't interested in his link, only the misreprentation of the "rich" vs. the poor.

Warren Buffet paid less because his income is from investments, not from wages. He is a producer too - his capital provides the resources necessary for an organization to form, grow, hire people, employ people, pay them and their taxes, produce a product (either an actual good or just a service), and that creates commerence if the product is acceptable to the market.

And all the additional taxes you mentioned are precisely the problem with the modern progressive movement. While socialism's guise is that it helps the poor, it does the exact opposite - It hurts the poor in a disproportionate way.

And who cares how much billionaires pay in taxes? How does their tax burden, or lack thereof, impact me?

And that is exactly the problem. Lots of people have problems understanding this concept. Its frequent portrayal by the right wing media exacerbates the problem. Let me try to help you understand.

Let's take a guy I know who makes ~$500k/yr. He's always complaining about how much he pays in taxes. Says he pays 40% in taxes(which I doubt). Then he'll ask me what my income tax bill is and bemoan how bad he's getting it and how everyone should pay their fair share and it's not right that he has to pay so much. Ok, so he pays 40% of his income in taxes, so do I. He denies that I pay as much as he does, proportional to our respective incomes.

Let's examine the tax loads. His first. He's married and gets the standard $12k deduction. On $488k he owes: ~$141k in income taxes. That's 28.9%. +1.45% for medicare=30.35% For SS let's just use the regular rate, it's probably going back soon anyway. 6.2% of $220k=13640 or 2.8% Total so far= 33.1%

Other taxes:
property/hoa- $3000
Gas tax- $1000
utility/phone/tv- $300
State fees-vehicle/hunting fishing license- $150
Sales tax(let's say they spend $50k on taxable purchases)-$4000
Embedded taxes(import tarriffs and corporate taxes and payroll and unemployment taxes) 25% of goods and services purchased- $12,500
Embedded taxes on mortgage principle and interest and insurance- $2500
Excise tax-$750
Those are all the ones I can think of right now, total $24200 or 5%

Total tax burden so far 38.1%

Let's say I make $50k and pay 6% in income taxes. 7.65% for SS/MC. total 13.65%
My sales tax will be less than theirs, we'll figure $20k in taxable purchases-$1600
Embedded taxes-$5000+$2500 on mortgage and insurance
I pay all the other taxes the same. Total $14300 or 28.6%

Total tax burden so far 42.25%

Whoa! Did I really just calculate that I pay a higher percentage of my income in taxes earning $50k/yr than my friend who earns $500k/yr? I think I did. So it isn't quite the case that income tax is the only tax that matters. All of these are real taxes that we really pay with real money, some are less direct than others. All of them are also optional, so the argument that one doesn't have to pay any particular tax is irrelevant. If you don't want to pay income tax, keep your income below a certain threshhold. If you don't want to pay property tax, then live with your parents, or in a mobile home on a small lot for a minimal bill. If you don't want to pay sales tax, make everything you need yourself. If you don't want to pay excise tax, make your own tobacco and alcohol. Et cetera.