In Defense of the Indefensible: Yes to Taxes!
An Unexpected Argument by Brian Viehland
I recently received an email entitled “Bar Stool Economics” that tried to relate a bar tab to taxes. The summary was that 10 men drank together daily and one rich man was paying to offset several of the poor men’s beer. When the bartender gave the group a break on their tab, the rich guy got most of it. The rest of the group got pissed and killed him, and without his money, no one could drink. (Read the whole story after the jump).
However, the breakdown saying that 40% are paying nothing and 10% are paying 60% doesn’t sound accurate at all.
As a small business owner who is in the middle class, my tax burden is 42% of every penny I make – I pay it proudly and without hesitation or argument (maybe a little grumbling from time to time). I pay it even though 24% of my income goes to social security that I don’t think will be in existence 35 years from now when I’m allowed to retire (if I’m ever allowed). I pay it not because I can’t find loopholes to get out of it, I pay it because it’s right and I can.
I pay it because my brother-in-law is on disability for a brain tumor.
I pay it because I know people who have been laid off when their companies moved oversees and are now on unemployment.
I pay it because large numbers of kids with potential will never get to go to college without government loans and grants.
I pay it because my local library is struggling and needs the money the government provides.
I pay it because I want the roads paved, the factory pollution limited, the NIH to research cancer cures, and because I want my 5 month old son to have a better USA than ever before.
So I say that people should be proud of the amount of taxes they pay. It should be a status symbol! By bragging about how much tax you pay, you are telling your nation and your countrymen how much you believe in them and support them. So let’s hear it! How much do you support our troops in dollars and cents? How much do you love your country in your bi-weekly paycheck? How much do you care for your neighbor on April 15th?
I love my country about $40,000 this year – and my wife loves our country in addition to that.
Bar Stool 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, the guys would pay according to this breakdown:
Poorest to Richest
$0, $0, $0, $0, $1, $3, $7, $12, $18, $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 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 tab broke down this way:
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 paid $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 me!’
‘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!
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.