Wednesday, October 22, 2008

A Little Humor

1st, a joke for economists:
Question: What's the capital of Iceland?
Answer: About $4.72
Next, a political joke:
And this week, President Bush announced a $250 billion -- everything's billions now, millions don't even count, have you noticed that? Millions is like chump change -- plan for the government, to directly buy shares of the nation's leading banks, to make sure they're run properly. They're going to make sure they're run properly, yeah. Because one thing we know is the people who gave us a $9 trillion debt, they know how to handle money.

— Jay Leno, The Tonight Show (courtesy of The Future of Freedom Foundation's Email Update)

Finally, a humorous tale that explains tax cuts:
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 $50 instead of $59 (15% 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 $9!'

'Yeah, that's right,' exclaimed the fifth man.
'I only saved a dollar, too. It's unfair that he got nine times more
than I!'

'That's true!!' shouted the seventh man.
'Why should he get $9 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.

No comments: