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Some history behind 'Bar Stool Economics' email now attached to Obama

By Todd Franko (Contact)


Published October 30, 2008

Lots of emails come into our boxes that have nothing to do with work.

Yesterday, I got the Harley rider video where the guy crushes his Harley by doing dumb parking lot tricks.

There are thousands of bogus solicits and tales. One I liked was the divorced lady who stuck seafood in the curtain rods of the beloved home she was turning over to her ex-hubby and his new flame. She ended up stinking them out of the house. (Google it)

And there are hundreds of presidential emails.

One presidential email I got Tuesday was really cool -- "Bar Stool Economics." It actually sent me researching online to learn more about the alleged article.

You must have seen it by now. If not, it’s below.

The email I received credits “Bar Stool Economics” to a U. of Georgia economics professor.

It offers (apparently) a great breakdown of how America’s tax system works by using 10 guys at a bar drinking $100 in booze. That tab gets divided based on the 10 gents’ income, and that’s where the tale gets interesting.

Read it for yourself. It’s pretty cool, and also fairly accurate to a degree.

But the current version of the email tabs it as “What Obama’s tax plan will do.”

That’s where the tale grows some long, long, long legs.

If it’s Obama’s tax plan, he wrote it about the time he was a state legislator in Illinois because the tale dates back to then, according to research done on snopes.com.

The tale has been authored by several professors who’ve had to go on the offensive to proclaim no authorship to the piece.

A Canadian accounting firm also allegedly authored it.

The piece has been cited in many places, on many web sites, and by many writers and editors, from William F. Buckley to, well, me.

Snopes has been fairly reliable with these email legends and tales, and their site says the tale actually started in 2001 as a letter to the editor in the Çhicago Tribune.

Anyway, check out both pieces — the original 10 men drinking at a bar (below), and then how this tale has grown on the internet. (Click here) They’re fun reading.

 

HERE IS OBMAMA’S Tax plan clear written explanation
 
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!’

‘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.

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

 

 


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