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Posts Tagged ‘economy’

This is a really simple and clear way to explain the tax policies proposed by Obama and how they work as well as the lng term effects of such policies. Ordinarily I’d say reading about economic and tax policies would be way too dry and complex perhaps better suited to before bedtime reading. In other words a snooze fest. However this is well written in language anybody can understand.

http://www.lynettelong.com/my_weblog/2008/10/bar-stool-econo.html

BAR STOOL ECONOMICS

Old, but worth repeating…
Our Tax System Explained: 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, 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 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 got’ ‘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, 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.

David R. Kamerschen, Ph.D.
Professor of Economics
University of Georgia

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

Boy oh boy! Those last two sentences speak volumes!

CQ

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I haven’t watched The View for quite a while now. Since the became all about the Obama love. However since it is Bill I’ll make an exception.

In Part 1 he talks about whether or not Hillary wanted to be VP, complex reasons that people vote and the need to respect that as well as sexism in society and in the election. You only have to listen to him for a quick minute and you suddenly remember why they call him the Big Dawg! This man could talk for days and you’d be content to listen.

Part 2 is all about the economy, the mortgage crisis and the bailout that is in the works. Bottom line is he thinks this is necessary but not enough. We should have gone with Hillary’s plan to creat a system to refinance peoples’ mortgages so they could afford them and the end result could actually have made a profit in the long run. Boy that hillary is smart. Can we have her back now?

Part 3 he says Barbara reminded him that a year ago he said McCain would be the republican nominee because he is the only republican that could win. He also says Obama will win but in the same breath said wonderful things about John McCain. Hmmmm. I have to wonder what there is that he didn’t say but might have wanted to? Plus you gotta say he brings out the best in people. Whoopie even wore a dress!

 

CQ

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