Socialism Analogy
Who is paying the bill?
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!" "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, boys and girls, 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."
-- Author unknown
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Page Last Updated: 17 April 2025