This is true economics as seen by those who understand it.

Bar Stool Economics

 

Suppose that every day, ten men go out for beer and the bill for all ten comes to $100 and 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." so 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, 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.

^^^ Best post ever on BGP!!!

Some see a bigger picture.

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Some also know that there is a cover charge to get into the bar. FICA and Medicare are paid at the same rate by the rich and the poor. (Actually, FICA/Social Security taxes are paid at a lower rate by those with incomes over $97,500.) Loopholes in the tax code benefit the wealthy and the poor pay a higher percentage of their income in state and local taxes.

 

The rich man above pays 59% of the bar bill. In the USA today the highest income tax bracket is 35%, among the lowest in the world. In the 1950s, the highest tax bracket was 92%. That high rate did not seem to hold this country back during the greatest peacetime growth of the 20th century.

 

Loopholes are available to all, but we don’t even see the inequality unless we look at the big picture. For example, we can deduct mortgage interest on our home and we don't have to pay capital gains when home appreciates in value. This is promoted as a way to promote home ownership, but the rich, who will have their own home anyway, can use it on an opulent mansion the same as the poor in a small home. And renters don’t benefit at all. Another way very-high income Americans (the richest 1% who have more wealth than 90% of the rest of us) avoid taxes, is to keep much of their money in offshore banks in Switzerland or the Camin Islands.

 

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The average (mean) income for Americans has risen since the depression, but since the 1980s, the median income has become stagnant and begun to fall. That means the rich are getting richer, but, the poor and middle class are getting poorer. Also remember that family incomes now come from two-earner households instead of from a single breadwinner.

 

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Why do the rich complain about taxes in the first place? They get more for their money! Life, liberty and happiness are promised to all, but the government provides more to the rich. The poor aren’t putting their ski-boats in at ramps built by the Army Corps of Engineers, traveling to Yellowstone, or being saved by the Coast Guard when their yacht springs a leak. The rich have more property, drive more, fly more, get better education, live in healthier environments and get better protection from law-enforcement. The justice system is available to all, but lawyers cost.

 

Those who serve in the military, which we are told defends our freedoms, are not the rich. The troops largely come from small towns and urban neighborhoods where there is no place else to go. The freedoms which make America great, which the rich can take advantage of, are protected by the poor.

 

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All this while the poorer a person is, the larger the portion of their income they give to charity.

 

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The American Dream is fading away and that will cost our country and our economy more than money. While there are some who go from rags to riches and some who go from riches to rags, the most reliable way of being rich today is to have rich parents. Many European countries now actually have higher levels of change in social class than the does the USA. When people believe that they live in a land of opportunity, they will work and sacrifice to improve themselves and their family. As it becomes harder to break out of poverty, hope leaks out of our country.

 

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The American economy is designed by the rich, for the rich. Our government, media, culture and even religion are the way they are because they support an economy which helps the rich remain rich. There are exceptions, but not enough to change the system.

 

The financial elites are not stupid; the rich will not let things get so bad that we are tempted to revolution, but don’t be fooled by social programs and charity. They exist only to keep the dissatisfaction from turning into chaos.

 

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Hope for a world where human life has value, greater value than money, is not realistic.

 

There is hope for progress and there is work to be done. Perhaps we can modify amoral institutions by appealing to the human people who work in those institutions. Perhaps we can persuade the rich that they will be better off if all of us are better off. Perhaps the standards of religious and ethical thought will change - they have before. Perhaps the masses of people will see their common cause and rise up and demand dignity. I am not optimistic, but I do hope, and I believe in doing the right thing whether there is hope or not.

 

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So going back to “bar stool economics,” and trying to relate it to the American economy, the rich are buying premium brands and micro-brews and $60 glasses of single malt scotch, but there are more people than ever who can't afford a Bud-Lite. And the rich aren't buying it for them.

 

This “bar stool economics” story - is a story. Propaganda. It has no relation to reality.

 

http://schreiberbike.blogspot.com/2008/10/bar-stool-economics-critque.html

Why should the rich be made to buy anyone's drink but their own? You claim that they benefit more from our government than a poor person, or a middle class person. This doesn't make sense. They pay the greatest percentage of income tax. Another question, should their be a policy to redistribute wealth from the rich to the poor? Why is the American dream fading away? We still have people starting new and sucessful businesses even during these times of economic crisis. How is demanding dignity equal with demanding wealth redistribution?

Ace's post is classic class warfare 101 from a democratic socialist mind. A fresh bold look inside the mind of a socialist. I so love the part where he/she states the rich "get more for their money" . Really odd but I've never witnessed a rich guy have his heating bill paid for him. I've never seen a rich guy get clothing vouchers send to him, nor pay for his housing. Never seen a rich guy get his food paid for a the grocery store. Socialism's great til the other guy's money runs out.

 

This country is what it is because of free market capitalism. The more we destroy that fact , the deeper in doo-doo we go.

PS When I pay my 941 today I'll be thinking about you Ace. I'll remember how great I've got it. ( I've never in my life made 6 figures either, got close but never made it) . Great week to mention taxation. Just sent 3 K in for county property tax. 2 k for the 941. thats Bi-weekly.

Ace's post is classic class warfare 101 from a democratic socialist mind. A fresh bold look inside the mind of a socialist. I so love the part where he/she states the rich "get more for their money" . Really odd but I've never witnessed a rich guy have his heating bill paid for him. I've never seen a rich guy get clothing vouchers send to him, nor pay for his housing. Never seen a rich guy get his food paid for a the grocery store. Socialism's great til the other guy's money runs out.

 

This country is what it is because of free market capitalism. The more we destroy that fact , the deeper in doo-doo we go.

 

 

I love when people thrown around the "socialism" and "class-warfare" tags.

 

There are two entitlement groups:

 

There are those who by whatever circumstance find themselves in the lowest income brackets and must (or choose) to receive benefits from the government and pay little into the system. They do have the chance to eventually remove themselves from that group.

 

There are those at the top of the income bracket who fight to pay as little as possible into the system, but are happy to partake of the many benefits that the system provides such as infrastructure, quality of life enhancements such as national parks and treasures to use as vacation destinations. They've even been known to receive social security benefits and unemployment benefits, although their personal wealth far exceeds that of the majority of Americans. They move their money and busiensses into off-shore accounts and into other countries and create shelters to reduce their taxable income. Sadly, most will always remain a part of that group.

 

 

And there are those of us in the middle for whom there are paying more than some, not as many as the others. Not enough money to move off shore, too much money to get any help. But we still pay into the system.

I love when people thrown around the "socialism" and "class-warfare" tags.

 

There are two entitlement groups:

 

There are those who by whatever circumstance find themselves in the lowest income brackets and must (or choose) to receive benefits from the government and pay little into the system. They do have the chance to eventually remove themselves from that group.

 

There are those at the top of the income bracket who fight to pay as little as possible into the system, but are happy to partake of the many benefits that the system provides such as infrastructure, quality of life enhancements such as national parks and treasures to use as vacation destinations. They've even been known to receive social security benefits and unemployment benefits, although their personal wealth far exceeds that of the majority of Americans. They move their money and busiensses into off-shore accounts and into other countries and create shelters to reduce their taxable income. Sadly, most will always remain a part of that group.

 

 

And there are those of us in the middle for whom there are paying more than some, not as many as the others. Not enough money to move off shore, too much money to get any help. But we still pay into the system.

 

Arey you claiming that the people who move money into offshore accounts still aren't paying more in taxes than a person in the middle class? Our problem in this country is that we think that a person who has more money should not only pay more in taxes, but also pay a much larger PERCENTAGE in taxes. How is that pulling an equal share?

“For of those to whom much is given, much is required”

 

Bible (Luke 12:48)

“For of those to whom much is given, much is required”

 

Bible (Luke 12:48)

 

And is being provided. The question is how much?

 

The story is a very good introduction to our system.

I love when people thrown around the "socialism" and "class-warfare" tags.

 

There are two entitlement groups:

 

There are those who by whatever circumstance find themselves in the lowest income brackets and must (or choose) to receive benefits from the government and pay little into the system. They do have the chance to eventually remove themselves from that group.

 

There are those at the top of the income bracket who fight to pay as little as possible into the system, but are happy to partake of the many benefits that the system provides such as infrastructure, quality of life enhancements such as national parks and treasures to use as vacation destinations. They've even been known to receive social security benefits and unemployment benefits, although their personal wealth far exceeds that of the majority of Americans. They move their money and busiensses into off-shore accounts and into other countries and create shelters to reduce their taxable income. Sadly, most will always remain a part of that group.

 

 

And there are those of us in the middle for whom there are paying more than some, not as many as the others. Not enough money to move off shore, too much money to get any help. But we still pay into the system.

 

Not saying that I disagree with you entirely, but your choice of wording in the bolded portion interests me. The rich do also have the option to remove themselves from their own group, and sadly, many many of those in the lowest income brackets will always remain a part of their group as well.

 

As the grandson of two WWII vets who grew up in inner-city, depression-strickened households, without the luxury of indoor plumbing, radiant heat or a furnace, both of whom managed get through college and make successful careers, and as the son of a man who paid his own way through high school and college, and as a person who paid his own way through high school and college, I don't have as much sympathy for those with low income who never make anything of themselves. Even as a teen, my path was clear: graduate from high school, get a job after high school to pay for college, graduate from college, get a job after college to support myself. If I hadn't been able to get the necessary scholarships and employment after high school, I would have gone into the military for the simple purpose of gaining the benefits of the GI bill. I knew that option was there, and it was my very clear "plan B". There are means for improvement offered to all of us if we choose. Why call it "sad" when people who find themselves in the upper income classification choose to remain there?

And is being provided. The question is how much?

 

The story is a very good introduction to our system.

 

Hey...I'll let the debate begin. I just figured a bunch of people are always throwing out a bible quote to support their political and socio-economic views, so I'd try it one time. :lol:

“For of those to whom much is given, much is required”

 

Bible (Luke 12:48)

 

Don't confuse the word much with the phrase most or almost all.

I think the important line in this entire thread will be the 1st one :

 

True econimics as seen by those that understand it.

Kinda like He who has ears let him hear.

 

A question for mom : How much do you think is fair for the rich to pay ? Currently they give over 1/2 of what they earn when state/local/federal taxes are combined. Isn't OVER 1/2 of what someone EARN's not enough ? I guess if you think the evil rich got their money handed to them by the Currency Fairy then taking it isn't that big a deal.

 

I get the feeling those that want to soak the rich think there money wasn't earned some how, therefore they feel no guilt about confiscating it. I know a few well off guys. 100% made their fortunes from scratch. One is a brother of mine. Another is best friend. They all made it by working hard and investing wisely. And definetly by taking huge risk. They deserve to be rewarded.

 

As a funny side note on my rather well off brother --he held a yard sale yesterday, any way to turn a buck.

Government cannot produce or create wealth or anything for that matter, it can only confiscate and redistribute. Contrary to popular belief, most wealth created in this country is by hard work and sacrifice. Therefore, it baffles me as to why folks like to buy into the class warfare garbage that spews from the mouths of many on here. Guess what? Increasing taxes on the so called "rich" will not improve my life or yours one iota!