Tax cuts made easy

I really don’t understand the taxpayer paying politicians to discuss taxation, particularly as it is pretty obvious that politicians don’t understand the basis of fair taxation.

 Here is an easy simple solution

 Suppose that every evening, 10 men go out for drinks and the bill for all ten comes to 100 bucks. 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 dollar.

The sixth would pay 3 dollars.

The seventh would pay 7 dollars.

The eighth would pay 12 dollars.

The ninth would pay 18 dollars.

The tenth man (the richest) would pay 59 dollars.

So, that’s what they decided to do……. The 10 men drank in the bar every evening and were quite happy with the arrangement, until one day, the owner said, “Since you are all such good customers, I’m going to reduce the cost of your daily drinks by 20 bucks overall.”

Drinks for the 10 men would now cost just 80 dollars and 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 dollars 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.

So, the bar owner suggested that it would be fair to reduce each man’s bill by a higher percentage the poorer he was, to follow the principle of the tax system they had been using, and he proceeded to work out the amounts he suggested that each should now pay.

Therefore, the fifth man, like the first four, now paid nothing.

The sixth now paid 2 bucks instead of 3 (33% saving).

The seventh now paid 5 instead of 7 (28% saving).

The eighth now paid 9 instead of 12 (25% saving).

The ninth now paid 14 instead of 18 (22% saving).

The tenth now paid 49 instead of 59 (16% saving).

Each of the six was better off than before. And the first four continued to drink for free. But, once outside the bar, the men began to compare their savings.

“I only got one dollar out of the 20 saving,” declared the sixth man. He pointed to the tenth man, “but he got 10 bucks!”

“Yeah, that’s right,” exclaimed the fifth man. “I only saved a dollar too.  It’s unfair – he got 10 times more benefit than me!”

“That’s true!” shouted the seventh man. “Why should he get 10 dollars back, when I got only 2? The wealthy always win!”

“Wait a minute,” yelled the first four men in unison, “we didn’t get anything at all. This new tax 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 their drinks 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, labor unions and government ministers, is how our tax system works. The people who pay the highest taxes will naturally 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.

For those who understand, no explanation is needed.

For those who do not understand, no explanation is possible.

13 Responses to “Tax cuts made easy”

  1. Ike Jakson Says:


    I would like to hear your wisdom on my tranche above.

  2. Nolanimrod Says:

    Wow! A half-hour ago I was asleep and here I am pontificating. Punditicating. Something, anyway. And you done right to come to yer old bud, Unca Chawn, the Nolanimrod.

    I have seen this before. When I did, I fell for it. And the basic gripe behind it is, well, it starts out simple and then when you try to talk about it it starts to put on a little heft and pretty soon you can’t remember what it was you originally tried to say and then you feel like that 700 pounder in Shaker Heights, Ohio (Shaker Heights, indeed; I imagine if she could move there’d be a whole lotta shakin goin on).

    It doesn’t work because it can’t. You’re chipping away at the slag that lies over the nugget of truth and it doesn’t matter how sharp the chisel (your wit) or how big the hammer (the facts at your disposal) you ain’t gonna find it because it’s not there, but over yonder sitting on a bench under the tree by the babbling brook with a big, cool pitcher of Country Time Lemonade and Andy Griffith to narrate the whole experience for you but you’ll never look up and see it because you’re so busy a-chippin away at that heap of slag.

    • Ike Jakson Says:


      I turned to you because you are my friend; and I know you have a clear mind. Where I am in the Deepest South on Earth it works: it’s really that simple. But I shall study the scientific parts of your expose and let you know what I think.

  3. Nolanimrod Says:

    OK, Ike-ster, here’s what I was getting at in my previous comment. I have a good cup of freshly-brewed Creole Cafe du Monde coffee, a Rocky Patel cigar, and I’m a-rarin’ to go.

    As I said, I have heard that analogy before. But that argument is talking about who should get what in a tax cut so it is kind of begging the question. What needs to be addressed is what you are trying to accomplish with the system of taxation (this is where it starts to get like the 700 pound woman and as you follow the argument around and around down all the different paths it can take you start to feel like the guy who had to change her diaper).

    But you don’t have to address that; you can go straight for the lemonade.

    Egad! See? As I pursue this I’m starting to feel like the diaper guy. I feel myself starting to lose it. Ishould probably sit back and flow chart this argument, but that kind of sensible, reasonable approach to discussion is not the Nolanimrod Way. So I’m going to plow ahead.

    The so-called left, so-called Progressives, et al, are afflicted with a giant case of economic penis-envy that has been with them so long it may by now be incorporated in their genetic makeup and be ineradicable without a rigorous program of selective breeding.

    Their outlook at least made some kind of sense when they came up with it. Welsh coal miners worked 16-hour 6-day weeks in 4-foot high coal shafts breathing methane and coal dust and maybe lived until they were forty. My own great-grandmother worked a six-day week in a sweatshop in St. Paul (that’s right – the bastion of mid-west liberalism) and made so little money that if a neighborhood angel had not operated a kind of daycare center for neighborhood ragamuffins my grandfather would not have survived his childhood. As it was he was so malnourished that his heart was weak and he died at 49 even though he became successful enough to have his obit published on the front page of the St. Paul paper with a banner headline: Area Businessman Dies in Chicago.

    And that right there perfectly illustrates the magic of our system, not just here but everywhere it was sincerely tried. The first Labour PM had been a coal miner. Maggie Thatcher was a grocer’s daughter. John D. Rockefeller started out as a telegrapher. A clerk. Conrad Hilton was a banker who discovered that a hotel in El Paso was renting out a room in 8-hour shifts – three rents for one day – and went into the hotel business.
    You had to be tough, you had to be smart, you had to be thrifty and sober. And you had to be lucky. Not everybody was. But what you didn’t have to be was the descendant of somebody who was a troop commander on St. Crispin’s Day at Agincourt.

    Everybody had a shot.

    Used to be that people admired the rich and successful and wanted to emulate them. Now the usual suspects want to lynch them. That’s the problem. Penis envy.

    • Ike Jakson Says:


      Two comments in a row and here I am trying to get my ducks in a row.

      Where does the slag come from? Is that some political cow-dung or is it for real?

      I give up.

  4. Cheech Says:

    Ike, our tax code is so ponderous, no one understands it.

    It’s time to establish a flat sales tax that would collect enough money to run every level of government. Let the retail outlets collect it and the various government bodies fight for their share.

    For some reason, entrenched elected officials get the idea “It’s the government’s money” and it is not! It’s our money that has been confiscated by the government.

    It’s going to take a while, but maybe after a couple of more elections we can clean out that kind of thinking.

    • Ike Jakson Says:


      You probably realize that the Post is from an email that I adapted. But I thought that it explains how a tax break should work under present laws.

      But you are right; many changes will have to be made before you can reform the tax system. Changing the President will be a good start.

  5. Cheech Says:

    Ike, all you have to do is mention the word “Tax” and us yanks start frothing at the mouth.

    Speaking of the annointed one, his approval rating is down to 42%.

    • Ike Jakson Says:

      Hi Cheech

      Paragraph one is the same all over when you have too much government.

      Paragraph two is almost too incredible to believe. Can’t the 42% work it out that the guy is a liar?

  6. Cheech Says:

    Also Ike, you may be interested in knowing it’s about 9 F here with a little snow and howling winds, blowing it around.

    • Ike Jakson Says:

      Oh. I see you again Cheech

      Right here summer has at last arrived with 93 F right now at 3:46 PM but a nice cool breeze is starting to pick up.

      Thanks for dropping by again.

  7. Cheech Says:

    Ike, I had to go out and clear the snow from a few driveways. Thank God for warm clothes.

    What we had today was nothing compared to what will be coming in the near future.

    Ike, Regarding Obama. You would have laughed yourself silly if you could have seen the way Bill Clinton took over one of his press conferences yesterday. Obama finally excused himself and left, while Clinton talked and answered questions for another 25 minutes.

    I’ll bet $20.00 Hillary will challenge Obama in the 2012 primaries.

    • Ike Jakson Says:

      Hi Cheech

      Good. Take care. Rather you than I; snow doesn’t attract me at all.

      The thing with Bill is all over the Blogs. It was as if he enjoyed making a fool of the Bama. I bet they have at last realized that they have a serious liability in having him in the White House. My heart bleeds for them [sic].

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