Bar Stool Economics

[tubgirl]

probably a repost, but:

I thought all you Obama lovers should read this.


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 on 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!"

"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, 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 < BR>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

[tubgirl]

and:

Another one I read.

To All My Valued Employees:


There have been some rumblings around the office about the
future of this company, and more specifically, your job. As
you know, the economy has changed for the worse and presents
many challenges. However, the good news is this: The economy
doesn't pose a threat to your job. What does threaten
your job however, is the changing political landscape in
this country.


Of course, as your employer, I am forbidden to tell you
whom to vote for - it is against the law to discriminate
based on political affiliation, race, creed, religion, etc.
Please vote who you think will serve your interests the
best.


However, let me tell you some little tidbits of fact which
might help you decide what is in your best interests.


First, while it is easy to spew rhetoric that casts
employers against employees, you have to understand that for
every business owner there is a back story. This back story
is often neglected and overshadowed by what you see and
hear. Sure, you see me park my Mercedes outside. You've
seen my big home at last year¢s Christmas party. I'm
sure; all these flashy icons of luxury conjure up some
idealized thoughts about my life.


However, what you don't see is the back story.


I started this company 12 years ago. At that time, I lived
in a 300 square foot studio apartment for 3 years. My entire
living apartment was converted into an office so I could put
forth 100% effort into building a company, which by the way,
would eventually employ you.


My diet consisted of Ramen Pride noodles because every
dollar I spent went back into this company. I drove a rusty
Toyota Corolla with a defective transmission. I didn't
have time to date. Often times, I stayed home on weekends,
while my friends went out drinking and partying. In fact, I
was married to my business -- hard work, discipline, and
sacrifice.


Meanwhile, my friends got jobs. They worked 40 hours a week
and made a modest $50K a year and spent every dime they
earned. They drove flashy cars and lived in expensive homes
and wore fancy designer clothes. Instead of hitting the
Nordstrom's for the latest hot fashion item, I was
trolling through the Goodwill store extracting any clothing
item that didn't look like it was birthed in the
70's. My friends refinanced their mortgages and lived a
life of luxury. I, however, did not. I put my time, my
money, and my life into a business with a vision that
eventually, some day, I too, will be able to afford these
luxuries my friends supposedly had.


So, while you physically arrive at the office at 9am,
mentally check in at about noon, and then leave at 5pm, I
don't. There is no "off" button for me. When
you leave the office, you are done and you have a weekend
all to yourself. I unfortunately do not have the freedom. I
eat, ####, and breathe this company every minute of the day.
There is no rest. There is no weekend. There is no happy
hour. Every day this business is attached to my hip like a 1
year old special-needs child. You, of course, only see the
fruits of that garden -- the nice house, the Mercedes, the
vacations... you never realize the back story and the
sacrifices I've made.


Now, the economy is falling apart and I, the guy that made
all the right decisions and saved his money, have to
bail-out all the people who didn't. The people that
overspent their paychecks suddenly feel entitled to the same
luxuries that I earned and sacrificed a decade of my life
for.


Yes, business ownership has is benefits but the price
I've paid is steep and without wounds.


Unfortunately, the cost of running this business, and
employing you, is starting to eclipse the threshold of
marginal benefit and let me tell you why:


I am being taxed to death and the government thinks I
don't pay enough. I have state taxes. Federal taxes.
Property taxes. Sales and use taxes. Payroll taxes. Workers
compensation taxes. Unemployment taxes. Taxes on taxes. I
have to hire a tax man to manage all these taxes and then
guess what? I have to pay taxes for employing him.
Government mandates and regulations and all the accounting
that goes with it, now occupy most of my time. On Oct 15th,
I wrote a check to the US Treasury for $288,000 for
quarterly taxes. You know what my "stimulus" check
was? Zero. Nada. Zilch.


The question I have is this: Who is stimulating the
economy? Me, the guy who has provided 14 people good paying
jobs and serves over 2,200,000 people per year with a
flourishing business? Or, the single mother sitting at home
pregnant with her fourth child waiting for her next welfare
check? Obviously, government feels the latter is the
economic stimulus of this country.


The fact is, if I deducted (Read: Stole) 50% of your
paycheck you'd quit and you wouldn't work here. I
mean, why should you? That's nuts. Who wants to get
rewarded only 50% of their hard work? Well, I agree which is
why your job is in jeopardy.


Here is what many of you don't understand ... to
stimulate the economy you need to stimulate what runs the
economy. Had suddenly government mandated to me that I
didn't need to pay taxes, guess what? Instead of
depositing that $288,000 into the Washington black-hole, I
would have spent it, hired more employees, and generated
substantial economic growth. My employees would have enjoyed
the wealth of that tax cut in the form of promotions and
better salaries. But you can forget it now.


When you have a comatose man on the verge of death, you
don't defibrillate and shock his thumb thinking that
will bring him back to life, do you? Or, do you defibrillate
his heart? Business is at the heart of America and always
has been. To restart it, you must stimulate it, not kill it.
Suddenly, the power brokers in Washington believe the mud of
America are the essential drivers of the American economic
engine. Nothing could be further from the truth and this is
the type of change you can keep.


So where am I going with all this?


It's quite simple.


If any new taxes are levied on me, or my company, my
reaction will be swift and simple. I fire you. I fire your
co-workers. You can then plead with the government to pay
for your mortgage, your SUV, and your child's future.
Frankly, it isn't my problem anymore.


Then, I will close this company down, move to another
country, and retire. You see, I'm done. I'm done
with a country that penalizes the productive and gives to
the unproductive. My motivation to work and to provide jobs
will be destroyed, and with it, will be my citizenship.


While tax cuts to 95% of America sounds great on paper,
don't forget the back story: If there is no job, there
is no income to tax. A tax cut on zero dollars is zero


So, when you make your decision to vote, ask yourself, who
understands the economics of business ownership and who
doesn't? Whose policies will endanger your job?


Answer those questions and you should know who might be the
one capable of saving your job. While the media wants to
tell you "It's the economy stupid" I'm
telling you it isn't.


If you lose your job, it won't be at the hands of the
economy; it will be at the hands of a political hurricane
that swept through this country, steamrolled the
constitution, and will have changed its landscape forever.
If that happens, you can find me in the South Caribbean
sitting on a beach, retired, and with no employees to worry
about.


Signed,
Your Boss

[tsntx]

wow now thats perspective

[Cuchulain]

Another sad attack against the Progressive Income Tax system, a resurrection of Ronnie RAYGUN's fictitious 'welfare queen' and more bullshit 'trickle-down' economics.

[tubgirl]

Another sad attack against the Progressive Income Tax system, a resurrection of Ronnie RAYGUN's fictitious 'welfare queen' and more bullshit 'trickle-down' economics.

why is it a "sad attack"? everything that was written is very logical and easy to follow....

[slinky]

Except it's not plausible in real life. Are Wall Street attorneys going to pull up stakes and leave the US if their taxes get raised because they make more than $500,000? Really? Where the fuck are they gonna go and what the fuck are they going to do somewhere else where they will do better?

The concept is moronically over simplistic. And the central concept that on the price cut everyone gets together and beats up the wealthy is setting up a straw man to knock down. The rich, in general, aren't going anywhere because they can't get what they get here anywhere else. The idea that if they get hit any harder than they currently are that they are all going to flee the country is just outright ridiculous.

[Oli]

Perhaps you should check your sources first-

http://davidk.myweb.uga.edu/ -Read the first line.


From 'Viral GrapeVine.com'-
There is a bogus viral email that you may notice floating through your email from time to time called “How Tax Cuts Work” by David R. Kamerschen, Professor. First, no one knows who really wrote this article or joke. Professor Kamerschen refutes the fact that he is the author. It was in fact originally circulated in 2001 or 2002 under the name of T. Davies.

And here is the humorous response, taking into account the real events of the past 8 years:
In the US and throughout most of the rest of the world, the tenth man would have paid off a politician for $10 to get a beer subsidy of $30 per night(to create jobs for the bartender). Of this $30, $10 of course would have covered the lobbying expense, $10 would go in his own pocket, $1 would go to the bartender to keep his mouth shut, and $9 would go to the bar.

The Bar would give him a kickback of $10 each night for bringing in his 9 buddies to make them into alcoholics, repeat customers for life.

The Bar would then raise their prices to $130 citing inflation and higher taxes.

The tenth richest man would then secure his finances in a Dutch Holding Company managed by a trust in Ireland which invests in Chase and Bank of America. He would then explain to his buddies that he is as poor as the rest of them and can’t afford to pay himself as he cries into his beer that night citing his latest financial report which shows him to be broke on paper so that he doesn’t have to pay taxes in the United States ever again.

Citing his former generosity, the other nine men would agree that the tenth man can now pay nothing like the 4 poorest.

The others would then be faced with an adjusted amount of

* The fifth would pay $3.
* The sixth would pay $10.
* The seventh would pay $22.
* The eighth would pay $38.
* The ninth would pay $57.

Now the group would recognize that this is not fair and so would lobby the Government for an Earned Drinking Credit for the Poorest men. The government would oblige and give the four poorest men $2 each, but they would tax the 5th - 9th men $2 each as well.

* 4 men receive a total of $8 and 5 men pay $10.

The adjusted amounts would then look like this for all 10

* First Receives $2 pays $2 | Net 0
* Second Receives $2 pays $2 | Net 0
* Third Receives $2 pays $2 | Net 0
* Fourth Receives $2 pays $2 | Net 0
* Fifth Pay $1 to bar pays $2 to tax | net paid $3
* Sixth Pay $8 to bar; pays $2 to tax | net paid $10
* Seventh Pay $20 to bar; pays $2 to tax | net paid $22
* Eighth Pay $36 to bar pays $2 to tax | net paid $38
* Ninth Pay $55 to bar; pays $2 to tax | net paid $57
* Tenth Man: Tax Credit Received: $30 ;
Pays $10 to politician;
$1 to bartender;
Receives $10 from Bar
Net RECEIVED $29 per night and free beer

Of course this can not go on forever as the sixth, seventh, eighth and ninth men can’t afford to pay those rates forever. So they start paying with their credit cards held by Bank of America and Chase.

The tenth man would start demanding a higher Return on Investment from his investment managers, who would be hearing similar requests from all of their other investors. They would then expand their holdings into mortgaged back securities where a good deal more profit could be made.

Meanwhile the Fifth through ninth men are racking up debt on their credit cards from drinking every night, their health care costs are increasing as their liver fails, and they are also spending more on gasoline as they drink and drive as they can no longer afford to cab it.

Ultimately, they end up refinancing their credit cards into their house where they have equity. The mortgage broker promises them a 4.9% interest rate on the refinance which sounds good as their credit card interest rate is up to 21%. The broker promises them that they will not have to verify their income, provide W2’s nor copies of their tax paper work.

Their mortgage broker doesn’t tell them, but lies about the value of their house in order to refinance their credit and help them avoid paying private mortgage insurance. At their current income levels, and without verifying their income, their mortgage would be classified as Sub Prime and the interest rate would be 10.9%

The mortgage officer lies about their income levels as well to boost the internal credit scoring mechanism and get them financed, not at 4.9% but 5.9%, which is better than 10.9% and happens to pay the mortgage broker a higher commission than a loan at 4.9% that is not sub prime.

The mortgage broker also promises them a payment of $900 per month, but fails to mention the balloon payment of $50,000 in the 5th year and doesn’t mention the adjustable rates in year 3.

The men separately show up with a hangover and sun glasses on the date of their close for their new mortgages. They trust their broker and do not read the paperwork in detail flipping and signing almost as fast as they could raise a beer bottle to their lips.

The loan closes, the mortgage broker gets a fat commission, the bank securitizes the mortgages by selling them to an Irish Hedge Fund and pockets collectively a billion dollars in profits that year.

The hedge fund holds the investment for a year, shows a 35% gain on paper and starts selling shares to retirement funds and 401ks in the US that the Sixth through 9th men just happen to have the rest of their life savings sitting in.

The tenth man sees the writing on the wall, literally magic marker on a stall in the restroom of the bar.

“The end is Nigh”

He pulls his money out of the Irish Hedge fund invested in real estate and invests in Gold at $600 a troy ounce.

Meanwhile, he lobbies congress to tighten bankruptcy laws for credit cards which he still has a sizable investment in. Congress tightens bankruptcy laws and makes it impossible to absolve credit card debt, forcing people into chapter 13 where they must pay off the debt within 3 years or go to debtors prison where they can work it off in 7 years.

Gas prices are still going up so the President ignores a minor terrorist threat, allows the terrorists to blow up a major building and then goes to war with the terrorists home country where there is no oil, and simultaneously with a country that sits on 10% of the worlds oil reserves that has a decimated military infrastructure.

Oil prices shoot through the roof with Gold following close behind. The President whose family comes from oil barons make a fortune and become famous at their skull and bones country club outside of Yale.

Meanwhile our famous 10 guys, start paying even more money at the pump. The first 4 guys end up taking second jobs working at Wal-Mart and have to give up drinking at the bar so that they can try and beat their teenage kids out of a promotion.

The fifth and sixth guys get foreclosed upon. They were forced to stop paying their mortgage payments so that they could pay their mandatory credit card payments as required by the new bankruptcy law.

The seventh, eighth and ninth men all previously traded up their homes for McMansions that they can not afford with interest only payments of $2300 a month. When foreclosures start happening their plans on flipping their McMansions and cashing in on the equity slips through their fingers.

To make matters worse seven and eight get laid off from the companies they work for when their jobs get outsourced to China. The ninth man keeps his job at a law firm, but fails to notice that his 401k fund is slipping and has lost 10% in the last year. Things are looking up as his law firm seems on the edge of landing a big contract with Merrill Lynch.

Then the real estate crash and sub prime mortgage scandal erupt. Banks start dropping like flies to be saved not by the cash strapped government that can barely afford the war for oil any longer, but by China. Oil and Gold soar, Gold hits $900 a troy ounce and Oil hits $130 a barrel (about the same amount for 10 rounds of beer prior to the crash). Beer prices hold steady for the first few months, but then start to edge up as gas prices for delivery creep into the bar owners expenses.

Then the first four men one night remember their favorite bar. They sneak around back around 4:30 am and steal 50 empty kegs that just happen to be made of pure aluminum. Those kegs are now worth about half the value of a keg that is full in scrap metal prices or about $80.

They are not stupid and don’t want to get caught turning the kegs in at the dump where the police are already looking for keg thieves. So they head out to the closed down manufacturing plant where they used to work. They start a big fire, and melt down the aluminum into big messy aluminum splashes on the cement.

They turn in the aluminum for cash and get caught up on their back alimony and child support before heading back to work at Wal-mart where they now work for their teen age kids that beat them out for that promotion earlier in the month because their job skills weren’t as good as recent high school graduates. They then begin dreaming of new ways to find aluminum alimony allowances.

Meanwhile, the banks and mortgage companies lobby congress spending about $10,000 a head in an election year to bail out the economy. Congress provides the major banks with government backed loans to refinance the bad sub prime loans so that the government can personally guarantee those bad loans. They also put $100 billion of actual cash into the hands of Americans hoping to stimulate the economy.

Americans however, are all in debt up to their eye balls and use the extra $1200 they receive to make 2-3 credit card payments. They take the $300 for each kid and buy groceries for the month and then they start worrying about next month.

The banks get away free as they have Chinese financing now and no bad loans as they have refinanced them over to the US Government. The US government had to print more money to pay for all of these actions and so Gold goes up to $1500 a troy ounce.

The tenth man is now worth Billions and moves to Costa Rica to retire taking the new trophy wife that used to be the bartenders girl friend with him.

The first four men end up going to county prison for 3 months for stealing aluminum dog crap receptacles after running out of kegs to steal.

The fifth and sixth men end up living in an apartment and then homeless after they lose their jobs at Wal-Mart.

The seventh and eighth men whom we previously left hanging in our story after they lost their jobs and ability to pay for their homes, end up losing their homes, and their kids. They and their spouses are each convicted of mortgage fraud by the FBI in a major sting operation after it is revealed that they lied on their mortgage applications. Their mortgage brokers who actually did the paper work cop a plea agreement in exchange for immunity with the Feds and rat out each of their unsuspecting customers.

The ninth man ends up losing his entire retirement fund which took a big hit as the dollar rapidly plummeted into free fall. He ends up refinancing his own house under a government backed loan for $650,000. Unfortunately, a tornado comes through that winter in a freak coincidence and levels the home. FEMA promises to provide assistance but never shows up and the ninth man freezes to death attempting to salvage the shreds of his belongings. His home insurance policy refuses to pay as they claim that his house was over valued and then they prove it with comparables studies from his own mortgage brokers database.

The tenth man ends up dumping his new bride a year later, moving back to the states a year after that when the US appears to have hit rock bottom and he leads up a Chinese real estate investment initiative in the states. He makes another $10 billion in ten years, but is then executed in Beijing for espionage.

Meanwhile, the bar tender goes on to win American Idol and sleep with Paula Abdul. They are now blissfully happy, doped up on anti-psychotics, and the biggest two idiots the world has ever seen.

[Jonny29]

Well, you can disregard and pooh pooh the first couple of posts, but the guy on wall street can easily go to a lower income tax country. Then some of the voters who voted for higher taxes "on someone else " is then subject to higher taxes himself to make up the difference. That is in fact justice! and remember if you voted for higher taxes on someone else YOU can always pay in more if you want. But you never do, do you?

disclaimer I voted Bob Barr

[chefmike]

disclaimer I voted Bob Barr

LMAO...and you admit to it?

[fitz207]

Another sad attack against the Progressive Income Tax system, a resurrection of Ronnie RAYGUN's fictitious 'welfare queen' and more bullshit 'trickle-down' economics.

Thank You!!