Ten men go out for beer: A lesson in the economics of taxation.

Posted on 08:39, April 22nd, 2007 by Al

Spotted this, of all places, on Polish Business News. It is a simple parable that uses beer to illustrate how taxes in the U.S. are distributed and the effects of tax breaks.

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.

Then the proprietor reduces their beer bill by $20, and the article goes on to explain why the richest man got (and deserves) the largest windfall.

Related posts

Posted in Beer, Law | Print

Comments

Stonch on 23 April, 2007 at 10:00 am
Gravatar for Anonymous

More evidence of the dangerously right wing climate in Eastern Europe.

Al on 23 April, 2007 at 12:26 pm
Gravatar for Anonymous

Well, I didn’t want to dig into the politics of it (and still don’t). This isn’t a policical blog, after all. I do like metaphors that use beer, though, which is why I added it.

No comment on the climate here in the States, either.

Kingman on 27 April, 2007 at 3:54 pm
Gravatar for Anonymous

Great blog but post is too political. Couldn’t agree more with Stonch sentiments.

DavidB on 5 December, 2007 at 10:18 am
Gravatar for Anonymous

Theres only one problem with that story. It implies that everyone gets the same amount of beer. If we equate beer and income it would look like this for the rich guy. 10 beers times 8 ounces of beer is 80 ounces. The richest guy ends up getting 40 ounces of beer! I doubt the four poor guys are getting more than one ounce each so even though the poor guys are getting a better relative deal the rich guy is still drinking half the night’s product and thus should be paying more to discourage such decadence and gluttony. If the rich guy eventually did not show up at the party he would not be losing much except ‘income’. He would be paying less of a premium for his greater share. The rest of the folks would be much better off and if distributed evenly would have much more beer to share. More than half a glass each. If that were the case then I’m sure everyone at the table would be more than willing to pay ‘his fair share’.

It’s time to start thinking a little more critically about some of the propaganda the poor suffering rich want us to consume. They already have the ability to go wherever they want so why don’t they? They are surely not doing us any favors.

Nick on 17 December, 2007 at 12:47 pm
Gravatar for Anonymous

yes, I like that explaination. And I was here looking for something wrong with the parable. The problem with that though is that the beer is NOT income. The beer is what the taxes go to. Which are given to the public. Perhaps you COULD argue that the rich mans taxes pay for his kids to get a better education. And the lack of taxes paid by the others means worse education for thiers. But ultimatly they are all getting the same amount of beer. Perhaps the poor get more if we think in term of welfare. So yeah.

Al on 18 December, 2007 at 3:06 pm
Gravatar for Anonymous

I should probably point out that I’m not agreeing or disagreeing with the explanation or the sentiment of the parable. I merely brought it up because it uses beer to illustrate the point.

Kevin on 29 January, 2008 at 9:44 am
Gravatar for Anonymous

Bad post. It sullies good beer with the bitter sediment of politics.

Besides, Warren Buffett offered a $1,000,000 bet (proceeds to the winner’s charity) to any member of the Forbes 400, if their effective tax rate was higher than their personal secretary’s effective tax rate. And he was kind, counting only payroll and income taxes, ignoring regressive taxes like sales tax.

So please, if you feel the need to spoil the good name of beer, at least link to something honest. This is straight-up bullshit propaganda.

NYC on 19 August, 2008 at 2:06 pm
Gravatar for Anonymous

When I go out with my friends I always pay for drinks. I’ve never gotten into a fight no matter what the tab was…

I do stop going out with the ones that never pay though… let those poor bastards stay sober.

NYCs last blog post..The benefits of investing in commodities

Post a Comment

Name:
Email:
Website:
Comments:
Search: