I’m going to keep tabs on how used this open thread is every week. If it seems like people don’t use it, I’ll discontinue. Until then, here’s something I was sent that I thought you should all see:
Our Tax System Explained: Bar Stool Economics
Suppose that every day, ten men go out for beers 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 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 a plan to reduce each man’s bill, and he worked 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).
Note that the tenth man got the smallest percentage reduction and now paid 61.25% of the total bill, where he previously paid 59% of the bill. While I’m struggling to remain in the middle class with today’s soaring
energy prices, I realize that I am better off than a lot of folks. I also understand that without the economic opportunity that comes with the investment of the rich people far outweighs the supposed unfair tax
breaks they get. Read on. This is where it gets good.
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 discount from 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 e 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.
For those who understand, no explanation is needed. For those who do not understand, no explanation is possible.
March 14th, 2009 at 8:23 am
That is a good one.
March 14th, 2009 at 8:25 am
Happy belated birthday to Mr. Romney.
Now let’s see if Martha is an early riser:
Mitt & Mike in 2012!
If not, then Mike & Marco (Rubio) in 2012!
March 14th, 2009 at 8:27 am
“Now let’s see if Martha is an early riser:” Haha, in fairness to her, the sun probably has not even risen in her part of the country.
March 14th, 2009 at 8:40 am
“the sun probably has not even risen in her part of the country.”
Yes, but she might have a telepathic sixth sense that will jolt her from REM sleep in order to excoriate Huckabee.
March 14th, 2009 at 8:43 am
Richard,
A conservative co-worker, who also happens to be a true American hero, shared that story via e-mail with me a few months ago. It’s a great one!
March 14th, 2009 at 8:46 am
its time for the torches and pitch forks!
March 14th, 2009 at 9:29 am
Well, I’m up. Will I do?
It’s ironic that mac should make a pro-Huckabee post on a thread decrying populism.
March 14th, 2009 at 9:55 am
Fun scenario. What liberals and progressives never ponder is that the half who pay for everything at the outset might come together and put constraints on those who just consume for free. “To each according to his needs” begs the question of what those “needs” might be.
To put things in a different context, haven’t we all seen some folks who always consume every cent of their disposable incomes and claim these reflect their “needs” — even though they aren’t big earners — and others who earn plenty but live frugally, preferring to save and invest for the future.
March 14th, 2009 at 10:28 am
I always enjoyed this story. Too bad that most liberals don’t see the logic of it.
March 14th, 2009 at 10:30 am
How about my idea that the party focus its narrative around the fact that nearly all of Obama’s economic proposals (with the exception of cap-and-trade) disproportionaly favor those who make under $30,000 a year? Turn Obama’s argument that Bush’s economic plans disproportionaly favored the rich around on its head…start kind of an economic culture war.
March 14th, 2009 at 10:31 am
marK,
Huck’s populism is the sugar that attracts but, unlike Edwards, when the voter bites the substance itself is a nourishing conservatism, not socialism.
March 14th, 2009 at 10:49 am
I’ve read your comments on this before, and I have to say that I think it’s a horrendous idea. I think such an argument would be about as popular as was the introduction of the Poll Tax in Thatcher’s UK.
At bottom, most of us tend not to think like Randites, but instead feel sympathy towards underdogs. I’d hazard a guess that all but the most dyed-in-the-wool libertarians have little problem accepting a minimal welfare state that benefits those who are truly disadvantaged on the labor market due to disability or other circumstances beyond an individual’s control.
March 14th, 2009 at 10:55 am
mac,
Populism seldom works for Republicans. At its heart is good-old-fashion identity politics. Its foundation is an us-versus-them meme.
Republicans start out as the minority party. Throw in an us-versus-them and we start dividing our base even further.
If we want any hope of winning the general election, we must have an inclusive message.
Huckabee’s main shtick in 2008 from start to finish was identity politics. Oh, it drew large crowds. The ‘us’es had a field day. But what those large crowds masked was the fact that large groups of ‘them’s were repulsed by his rhetoric. That is a luxury the Republican party cannot afford.
March 14th, 2009 at 11:08 am
MarK,
Populism wins elections, including 2008. If Huck had won the presidency he’d have used the economic crisis to promote a conservative remedy such as the Fair or a flat tax, instead of the socialism were getting from Obama, not to mention the social anarchy Obama wants.
Populism wins, we can’t afford to lose.
March 14th, 2009 at 11:10 am
Biden to attend a kick-off event for Blanche Lincoln in Arkansas this weekend…I don’t think the VP has too many fans down in that state, may have been a better idea to get former President Clinton.
Does Asa Hutchinson have a chance against Lincoln? I still like the idea of Huckabee bluffing the hell out of Lincoln by forming an exploratory committee, so that Lincoln makes the correct votes.
March 14th, 2009 at 11:17 am
“I still like the idea of Huckabee bluffing the hell out of Lincoln by forming an exploratory committee, so that Lincoln makes the correct votes.”
Good idea Tommy Boy!
March 14th, 2009 at 11:27 am
“Populism wins elections, including 2008. “
But seldom for Republicans, especially at the National level.
How well did Palin’s speal to small town America that they were the “Real” Americans go over? Small town America certainly loved it. They turned out in droves. But Mrs. Palin’s negatives went through the roof when she did that. It automatically turned off everyone else.
“Us” versus “them” mathematically makes winning harder for the minority party. I did not say impossible, just harder. That is a fact you are going to have to learn to accept. Don’t let the fact that you might be one of the “us”es blind you to it.
I consider myself a small-town American, but I cringed when I heard Sarah Palin doing that. I said to myself, “She just made a big mistake. We will never win the election now.” I was right.
Was that the only reason? No. But it was a big part.
March 14th, 2009 at 11:32 am
The article is fine in the sense that if you tax people too much then they will move abroad and certainly any tax rate at 60% or more will hamper the economy, as particularly happened during the Carter years. However, a tax rate below around 40% will often widen the deficit and have a negative impact on social mobility. The country with the best level of social mobility, Norway according to the Sutton Trust, has a top rate of around 45-50%. A country such as Sweden with a top rate of 60% is only tied with Canada, again with a top rate of around 45-50%. The US and UK presently have the lowest mobility levels in the table and both have top rates of around 35-40% (although both the Obama and Brown governments have promised to increase the top rate).
March 14th, 2009 at 11:34 am
‘But seldom for Republicans, especially at the National level.”
Reagan was a notable exception.
March 14th, 2009 at 11:41 am
I’m actually not a hardcore libertarian type (I wasn’t fan of Mark Sanford’s counterproposal, if he did have one, to Obama’s “stimulus”)…I don’t oppose government spending a decent amount on infrastructure, energy (as long as there’s a proper balance between the amount of government spending on renewable and non-renewable sources but definately no on regional sources such as ethanol subsidies), and national defense. Sure, you’ll get a couple boondoggles now and then but at least people are working on those boondoggles.
However, my concern for the uninsured, students stuck in poorly performing schools in inner-city, homeless people, people delinquent on their mortgages, and the unemployed is minimal. These stories don’t strike me as underdog stories because they are asking the government for financial subsidies and assistance…underdogs do the heavy lifting themselves. Obama’s economic policies disproportionaley favors them without providing much, if any benefit, to the insured, students not stuck in poorly performing schools in inner-cities, non-homeless people, people not late on their mortgages, and the employed. More Americans fall in the latter categories than the former categories.
March 14th, 2009 at 12:02 pm
Reagan was an “us” (the American people) versus “It” (The overreaching Government) populist. He was for small town America, Big City America, Native born Americans, Immigrant Americans, Small Business America, Big Business America. That about covers everyone.
Who were Huckabee’s “them”?
March 14th, 2009 at 12:34 pm
First, let me say again, I’m the Race412 ‘Mitt & Mike’ guy.
Now that I’ve established that basis from which to build, Huck is also an “us” (the American people) versus “It” (The overreaching Government) populist. He is for small town America, Big City America, Native born Americans, Immigrant Americans, Small Business America, Big Business America. Yes, that about covers everyone.
Huck is seen otherwise by some in the GOP partly because he got into a bruising political fight with the very guy I’m proposing he join forces with. He’s also labeled divisive or extreme by the left
(and some libertarians) because they fear that his social views will gain traction/attract social conservatives that the Dems take for granted/abuse, namely African-Americans and Hispanics.
March 14th, 2009 at 1:41 pm
Mac, if Huckabee acts like a team player and stops having everything be about himself, I could buy into the concept of Mitt choosing Huckabee as VP. If the bitterness stops, I think it might be a very heavy vote getter. Mitt has shown his ability to get votes from across the aisle, and I think Huckabee could add to that number. Plus, I think it could actually be a ‘turn on’ for voters to have a Mormon choosing an evangelical as his VP. That could be something to get excited about as a voter. I’ll keep it in mind as we move forward.
March 14th, 2009 at 1:49 pm
Illinois guy,
Of course, I don’t agree your characterization of Huckabee, but I agree with everything you wrote after your first “I think…”
March 14th, 2009 at 2:06 pm
Well, to be clear, the ‘bitterness’ was not all directed as pertaining to the Huck supporters. I normally do not hold a grudge at all, but I’m having trouble getting over the way Huckabee conducted his campaign and the first few months after he got out. If I’m having trouble, I know many others are also.
March 14th, 2009 at 4:17 pm
Being away most of the day, I am late back at the station so to speak. First, I think it is not accurate to accuse Mr. Huckabee of being 100% Populist nor is it accurate to accuse Mr. Romney of being 100%, anti-Populist (sorry if I made up that word. However, just as it was mentioned that it is difficult to elect a 100% Populist candidate, I would argue that it is also difficult to elect the total opposite. It is fair to say that although both candidates are more Conservative than Liberal, (I for one will stay out of the contest as to who is more Conservative because among other things, our definitions could differ slightly) both candidates represent different factions of the party. In the name a party unity, I would be just as happy to have a Mitt & Mike type ticket than to have two people who are somewhat of a blend of the two. However, one problem is that the two men (and perhaps the two camps) do not get along and having a ticket where the two do not get along would not be good. I fear that we cannot get a clone for each man in just a few years so we can all start fresh. Though I am a Palinite, I would 100 times prefer an M & M ticket over Mr. Obama. Furthermore, though I do not agree with Mr. Romney, Mr. Huckabee and Mr. Pawlenty quite as much as Mrs. Palin, I would be satisfied with any of them over Mr. Obama and they might even be the right people. I just fear that an M & M ticket just will not fly, but if it does, good luck. I just hope that for the good of the party, both Ms reach out to the other camp as best as possible as they each run as good campaign as possible. No matter who wins, we need both M factions in the party.
March 14th, 2009 at 4:18 pm
I think Gov Huckabee would be an awful idea on the national ticket. Why? I see him as a third term of Pres Bush 43, but a little more smooth at public speaking. He’s got about 3 years to change that view if he wants to win my vote in 2012.
March 14th, 2009 at 7:24 pm
Richard,
That’s what a lot of his critics would have us believe, you certainly have a right to your opnion, but I’m convinced Mike would be quite a bit more fiscally conservative than W.
March 14th, 2009 at 8:01 pm
27 – I’m pretty far from a Huckabee supporter, but I think Bush’s approval ratings probably wouldn’t have tanked quite as far if he were a better communicator.
March 15th, 2009 at 12:51 am
#29 GetReal, I doubt it would have been much different. He was peddling crap, and people are bound to notice the smell after awhile. Not even the Great Communicator himself would have been able to sell it.
#28 mac, as I said, he has 3 years to convince me otherwise. I wouldn’t vote against him if my choices were him and Pres Obama, but I need convincing if I’m to be happy about it. The same thing went with Sen McCain. If the best he could get is reluctant support from me, of all people, he’s toast in a general. I would certainly be more supportive of Gov Romney than Gov Huckabee at this point, however.
March 15th, 2009 at 7:06 am
I am not saying that Mr. Bushis perfect, but with respect, I would not call a person who protected us from terrorism a peddler of crap. Furthermore, I am in no way insulting either Mr. Bush or Mr. Huckabee, but although they may score similar score on the Progressive tests, there are at least some policy differences with each. They both have quite different personalities and although both were Southern governors, (like a lot of politicians from both parties) they each have their own life story.
March 15th, 2009 at 8:08 am
#31 I don’t think I was clear. Pres Bush, on domestic issues, did a poor job on policy. Medicare supplement, abandonment of SS reform, and explosion of debt rank as crap to me, and these are the things I’m calling crap. Pres Bush’s best hope for a positive legacy will depend on Iraq and his success in keeping the US safe from terrorists, two things that we owe him a large debt of gratitude for.