Econmics

Got this forwarded to me.

> 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, 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 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! ''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!' (Sounds so familiar)
>
>
> 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, boys and girls, 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 For those who understand, no
> explanation

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Econmics