O/T - Obama's new tax plan explained in Beer

On 1/29/2011 6:31 AM, HeyBub wrote:
> Matt wrote:
>> I received this broadcast email thought I would share it as it might
>> provide some humour
>>
>> At last the tax system explained such that we can understand.
>>
>
> Another beer analogy:
>
> http://www.daybydaycartoon.com/2011/01/29/#005963
>
>
'Course, you don't buy beer, you only rent it ...

On Jan 26, 5:04=C2=A0pm, "Matt" <[email protected]> wrote:
> I received this broadcast email thought I would share it as it might prov=
ide
> some humour
>
> At last the tax system explained such that we can understand.
>
> While modeling his stimulus plan after FDR's new Deal in which he repeale=
d
> prohibition, Obama has developed the "stimulating" Beer Tax Plan.
>
> =C2=A0 =C2=A0 =C2=A0 =C2=A0 =C2=A0 =C2=A0 =C2=A0 =C2=A0THE TAX SYSTEM EXP=
LAINED IN BEER
>
> =C2=A0 =C2=A0 =C2=A0 =C2=A0 =C2=A0 =C2=A0 =C2=A0 =C2=A0Suppose that every=
day, ten men go out for beer and the bill
> for all
> =C2=A0 =C2=A0 =C2=A0 =C2=A0 =C2=A0 =C2=A0 =C2=A0 ten comes to $100...
>
> =C2=A0 =C2=A0 =C2=A0 =C2=A0 =C2=A0 =C2=A0 =C2=A0 =C2=A0If they paid their=
bill the way we pay our taxes, it would go
> =C2=A0 =C2=A0 =C2=A0 =C2=A0 =C2=A0 =C2=A0 =C2=A0 something like this...
>
> =C2=A0 =C2=A0 =C2=A0 =C2=A0 =C2=A0 =C2=A0 =C2=A0 =C2=A0The first four men=
(the poorest) would pay nothing.
> =C2=A0 =C2=A0 =C2=A0 =C2=A0 =C2=A0 =C2=A0 =C2=A0 =C2=A0The fifth would pa=
y $1.
> =C2=A0 =C2=A0 =C2=A0 =C2=A0 =C2=A0 =C2=A0 =C2=A0 =C2=A0The sixth would pa=
y $3.
> =C2=A0 =C2=A0 =C2=A0 =C2=A0 =C2=A0 =C2=A0 =C2=A0 =C2=A0The seventh would =
pay $7..
> =C2=A0 =C2=A0 =C2=A0 =C2=A0 =C2=A0 =C2=A0 =C2=A0 =C2=A0The eighth would p=
ay $12.
> =C2=A0 =C2=A0 =C2=A0 =C2=A0 =C2=A0 =C2=A0 =C2=A0 =C2=A0The ninth would pa=
y $18.
> =C2=A0 =C2=A0 =C2=A0 =C2=A0 =C2=A0 =C2=A0 =C2=A0 =C2=A0The tenth man (the=
richest) would pay $59.
>
> =C2=A0 =C2=A0 =C2=A0 =C2=A0 =C2=A0 =C2=A0 =C2=A0 =C2=A0So, that's what th=
ey decided to =C2=A0do..
>
> =C2=A0 =C2=A0 =C2=A0 =C2=A0 =C2=A0 =C2=A0 =C2=A0 =C2=A0The ten men drank =
in the bar every day and seemed quite happy
> with the
> =C2=A0 =C2=A0 =C2=A0 =C2=A0 =C2=A0 =C2=A0 =C2=A0 =C2=A0arrangement, until=
one day, the owner threw them a curve
> ball. =C2=A0"Since
> =C2=A0 =C2=A0 =C2=A0 =C2=A0 =C2=A0 =C2=A0 =C2=A0 =C2=A0you are all such g=
ood customers," he said, "I'm going to
> reduce the
> =C2=A0 =C2=A0 =C2=A0 =C2=A0 =C2=A0 =C2=A0 =C2=A0 cost of your daily beer =
by $20". =C2=A0Drinks for the ten men would
> now
> =C2=A0 =C2=A0 =C2=A0 =C2=A0 =C2=A0 =C2=A0 =C2=A0 cost just $80.
>
> =C2=A0 =C2=A0 =C2=A0 =C2=A0 =C2=A0 =C2=A0 =C2=A0 =C2=A0The group still wa=
nted to pay their bill the way we pay our
> taxes. So
> =C2=A0 =C2=A0 =C2=A0 =C2=A0 =C2=A0 =C2=A0 the first four men were unaffec=
ted. =C2=A0They would still drink for
> free.
> =C2=A0 =C2=A0 =C2=A0 =C2=A0 =C2=A0 =C2=A0 But what about the other six me=
n? =C2=A0How could they divide the $20
> =C2=A0 =C2=A0 =C2=A0 =C2=A0 =C2=A0 =C2=A0 windfall so that everyone would=
get his fair share?
>
> =C2=A0 =C2=A0 =C2=A0 =C2=A0 =C2=A0 =C2=A0 =C2=A0They realized that $20 di=
vided by six is $3.33. =C2=A0But if they
> =C2=A0 =C2=A0 =C2=A0 =C2=A0 =C2=A0 =C2=A0 subtracted that from every body=
's share, then the fifth man and
> the
> =C2=A0 =C2=A0 =C2=A0 =C2=A0 =C2=A0 =C2=A0 sixth man would each end up bei=
ng paid to drink his beer.
>
> =C2=A0 =C2=A0 =C2=A0 =C2=A0 =C2=A0 =C2=A0 =C2=A0So, the bar owner suggest=
ed that it would be fair to reduce
> each man's
> =C2=A0 =C2=A0 =C2=A0 =C2=A0 =C2=A0 =C2=A0 =C2=A0bill by a higher percenta=
ge the poorer he was, to follow the
> principle
> =C2=A0 =C2=A0 =C2=A0 =C2=A0 =C2=A0 =C2=A0 of the tax system they had been=
using, and he proceeded to work
> out
> =C2=A0 =C2=A0 =C2=A0 =C2=A0 =C2=A0 =C2=A0 the amounts he suggested that e=
ach should now pay.
>
> =C2=A0 =C2=A0 =C2=A0 =C2=A0 =C2=A0 =C2=A0 =C2=A0And so the fifth man, lik=
e the first four, now paid nothing
> (100%
> =C2=A0 =C2=A0 =C2=A0 =C2=A0 =C2=A0 =C2=A0 saving). The sixth now paid $2 =
instead of $3 (33% saving). The
> seventh
> =C2=A0 =C2=A0 =C2=A0 =C2=A0 =C2=A0 =C2=A0 =C2=A0now paid $5 instead of $7=
(28% saving). The eighth now paid $9
> instead
> =C2=A0 =C2=A0 =C2=A0 =C2=A0 =C2=A0 =C2=A0 =C2=A0of $12 (25% saving). The =
ninth now paid $14 instead of $18 (22%
> =C2=A0 =C2=A0 =C2=A0 =C2=A0 =C2=A0 =C2=A0 saving). The tenth now paid $49=
instead of $59 (16% saving).
>
> =C2=A0 =C2=A0 =C2=A0 =C2=A0 =C2=A0 =C2=A0 =C2=A0Each of the six was bette=
r off than before. =C2=A0And the first four
> =C2=A0 =C2=A0 =C2=A0 =C2=A0 =C2=A0 =C2=A0 continued to drink for free. =
=C2=A0But, once outside the bar, the men
> began
> =C2=A0 =C2=A0 =C2=A0 =C2=A0 =C2=A0 =C2=A0 =C2=A0to compare their savings.=
.
>
> =C2=A0 =C2=A0 =C2=A0 =C2=A0 =C2=A0 =C2=A0 =C2=A0"I only got a dollar out =
of the $20 saving," declared the sixth
> man.
> =C2=A0 =C2=A0 =C2=A0 =C2=A0 =C2=A0 =C2=A0 He pointed to the tenth man,"bu=
t he got $10!"
>
> =C2=A0 =C2=A0 =C2=A0 =C2=A0 =C2=A0 =C2=A0 =C2=A0"Yeah, that's right," exc=
laimed the fifth man. =C2=A0"I only saved a
> dollar
> =C2=A0 =C2=A0 =C2=A0 =C2=A0 =C2=A0 =C2=A0 =C2=A0too. =C2=A0It's unfair th=
at he got ten times more benefit than me!"
>
> =C2=A0 =C2=A0 =C2=A0 =C2=A0 =C2=A0 =C2=A0 =C2=A0"That's true!" shouted th=
e seventh man. =C2=A0"Why should he get $10
> back,
> =C2=A0 =C2=A0 =C2=A0 =C2=A0 =C2=A0 =C2=A0 when I got only $2? =C2=A0The w=
ealthy get all the breaks!"
>
> =C2=A0 =C2=A0 =C2=A0 =C2=A0 =C2=A0 =C2=A0 =C2=A0"Wait a minute," yelled t=
he first four men in unison, "we
> didn't get
> =C2=A0 =C2=A0 =C2=A0 =C2=A0 =C2=A0 =C2=A0 anything at all. =C2=A0This new=
tax system exploits the poor!"
>
> =C2=A0 =C2=A0 =C2=A0 =C2=A0 =C2=A0 =C2=A0 =C2=A0The nine men surrounded t=
he tenth and beat him up.
>
> =C2=A0 =C2=A0 =C2=A0 =C2=A0 =C2=A0 =C2=A0 =C2=A0The next night the tenth =
man didn't show up for drinks, so the
> nine
> =C2=A0 =C2=A0 =C2=A0 =C2=A0 =C2=A0 =C2=A0 sat down and had their beers wi=
thout him. =C2=A0But when it came time
> to
> =C2=A0 =C2=A0 =C2=A0 =C2=A0 =C2=A0 =C2=A0 pay the bill, they discovered s=
omething important. =C2=A0They didn't
> have
> =C2=A0 =C2=A0 =C2=A0 =C2=A0 =C2=A0 =C2=A0 enough money between all of the=
m for even half of the bill!
>
> =C2=A0 =C2=A0 =C2=A0 =C2=A0 =C2=A0 =C2=A0 =C2=A0And that, boys and girls,=
journalists and government ministers,
> is how
> =C2=A0 =C2=A0 =C2=A0 =C2=A0 =C2=A0 =C2=A0 =C2=A0our tax system works. =C2=
=A0The people who already pay the highest
> taxes
> =C2=A0 =C2=A0 =C2=A0 =C2=A0 =C2=A0 =C2=A0 will naturally get the most ben=
efit from a tax reduction. =C2=A0Tax
> them
> =C2=A0 =C2=A0 =C2=A0 =C2=A0 =C2=A0 =C2=A0 too much, attack them for being=
wealthy, and they just may not
> show up
> =C2=A0 =C2=A0 =C2=A0 =C2=A0 =C2=A0 =C2=A0 =C2=A0anymore. =C2=A0In fact, t=
hey might start drinking overseas, where
> the
> =C2=A0 =C2=A0 =C2=A0 =C2=A0 =C2=A0 =C2=A0 atmosphere is somewhat friendli=
er.
>
> =C2=A0 =C2=A0 =C2=A0 =C2=A0 =C2=A0 =C2=A0 =C2=A0David R. Kamerschen, Ph.D=
.
> =C2=A0 =C2=A0 =C2=A0 =C2=A0 =C2=A0 =C2=A0 =C2=A0Professor of Economics.
>
> =C2=A0 =C2=A0 =C2=A0 =C2=A0 =C2=A0 =C2=A0 =C2=A0For those who understand,=
no explanation is needed.
> =C2=A0 =C2=A0 =C2=A0 =C2=A0 =C2=A0 =C2=A0 =C2=A0For those who do not unde=
rstand, no explanation is possible.

{Editor's note: The following is not my work, but then again the above
is not the work of David R. Kamerschen either so it all works out in
the end.}

OK, so in that example you are treated like =E2=80=98boys and girls=E2=80=
=99 and
offered up a simple analogy that any beer drinker could relate to and
it is asserted by someone that would appear to know what they are
talking about.

Its all bogus, including the lesson,
How Taxes Really Work

To start with . . . .

In the US and throughout most of the rest of the world, the tenth
man would have paid off a politician for $10 to get a beer subsidy of
$30 per night(to create jobs for the bartender). Of this $30, $10 of
course would have covered the lobbying expense, $10 would go in his
own pocket, $1 would go to the bartender to keep his mouth shut, and
$9 would go to the bar.

The Bar would give him a kickback of $10 each night for bringing
in his 9 buddies to make them into alcoholics, repeat customers for
life.

The Bar would then raise their prices to $130 citing inflation and
higher taxes.

The tenth richest man would then secure his finances in a Dutch
Holding Company managed by a trust in Ireland which invests in Chase
and Bank of America. He would then explain to his buddies that he is
as poor as the rest of them and can=E2=80=99t afford to pay himself as he
cries into his beer that night citing his latest financial report
which shows him to be broke on paper so that he doesn=E2=80=99t have to pay
taxes in the United States ever again.

Citing his former generosity, the other nine men would agree that
the tenth man can now pay nothing like the 4 poorest.

The others would then be faced with an adjusted amount of

* The fifth would pay $3.
* The sixth would pay $10.
* The seventh would pay $22.
* The eighth would pay $38.
* The ninth would pay $57.

Now the group would recognize that this is not fair and so would
lobby the Government for an Earned Drinking Credit for the Poorest
men. The government would oblige and give the four poorest men $2
each, but they would tax the 5th =E2=80=93 9th men $2 each as well.

* 4 men receive a total of $8 and 5 men pay $10.

The adjusted amounts would then look like this for all 10

* First Receives $2 pays $2 | Net 0
* Second Receives $2 pays $2 | Net 0
* Third Receives $2 pays $2 | Net 0
* Fourth Receives $2 pays $2 | Net 0
* Fifth Pay $1 to bar pays $2 to tax | net paid $3
* Sixth Pay $8 to bar; pays $2 to tax | net paid $10
* Seventh Pay $20 to bar; pays $2 to tax | net paid $22
* Eighth Pay $36 to bar pays $2 to tax | net paid $38
* Ninth Pay $55 to bar; pays $2 to tax | net paid $57
* Tenth Man: Tax Credit Received: $30 ;
Pays $10 to politician;
$1 to bartender;
Receives $10 from Bar
Net RECEIVED $29 per night and free beer

Of course this can not go on forever as the sixth, seventh, eighth
and ninth men can=E2=80=99t afford to pay those rates forever. So they star=
t
paying with their credit cards held by Bank of America and Chase.

The tenth man would start demanding a higher Return on Investment
from his investment managers, who would be hearing similar requests
from all of their other investors. They would then expand their
holdings into mortgaged back securities where a good deal more profit
could be made.

Meanwhile the Fifth through ninth men are racking up debt on their
credit cards from drinking every night, their health care costs are
increasing as their liver fails, and they are also spending more on
gasoline as they drink and drive as they can no longer afford to cab
it.

Ultimately, they end up refinancing their credit cards into their
house where they have equity. The mortgage broker promises them a 4.9%
interest rate on the refinance which sounds good as their credit card
interest rate is up to 21%. The broker promises them that they will
not have to verify their income, provide W2=E2=80=B2s nor copies of their t=
ax
paper work.

Their mortgage broker doesn=E2=80=99t tell them, but lies about the val=
ue
of their house in order to refinance their credit and help them avoid
paying private mortgage insurance. At their current income levels, and
without verifying their income, their mortgage would be classified as
Sub Prime and the interest rate would be 10.9%

The mortgage officer lies about their income levels as well to
boost the internal credit scoring mechanism and get them financed, not
at 4.9% but 5.9%, which is better than 10.9% and happens to pay the
mortgage broker a higher commission than a loan at 4.9% that is not
sub prime.

The mortgage broker also promises them a payment of $900 per
month, but fails to mention the balloon payment of $50,000 in the 5th
year and doesn=E2=80=99t mention the adjustable rates in year 3.

The men separately show up with a hangover and sun glasses on the
date of their close for their new mortgages. They trust their broker
and do not read the paperwork in detail flipping and signing almost as
fast as they could raise a beer bottle to their lips.

The loan closes, the mortgage broker gets a fat commission, the
bank securitizes the mortgages by selling them to an Irish Hedge Fund
and pockets collectively a billion dollars in profits that year.

The hedge fund holds the investment for a year, shows a 35% gain
on paper and starts selling shares to retirement funds and 401ks in
the US that the Sixth through 9th men just happen to have the rest of
their life savings sitting in.

The tenth man sees the writing on the wall, literally magic marker
on a stall in the restroom of the bar.

=E2=80=9CThe end is Nigh=E2=80=9D

He pulls his money out of the Irish Hedge fund invested in real
estate and invests in Gold at $600 a troy ounce.

Meanwhile, he lobbies congress to tighten bankruptcy laws for
credit cards which he still has a sizable investment in. Congress
tightens bankruptcy laws and makes it impossible to absolve credit
card debt, forcing people into chapter 13 where they must pay off the
debt within 3 years or go to debtors prison where they can work it off
in 7 years.

Gas prices are still going up so the President ignores a minor
terrorist threat, allows the terrorists to blow up a major building
and then goes to war with the terrorists home country where there is
no oil, and simultaneously with a country that sits on 10% of the
worlds oil reserves that has a decimated military infrastructure.

Oil prices shoot through the roof with Gold following close
behind. The President whose family comes from oil barons make a
fortune and become famous at their skull and bones country club
outside of Yale.

Meanwhile our famous 10 guys, start paying even more money at the
pump. The first 4 guys end up taking second jobs working at Wal-Mart
and have to give up drinking at the bar so that they can try and beat
their teenage kids out of a promotion.

The fifth and sixth guys get foreclosed upon. They were forced to
stop paying their mortgage payments so that they could pay their
mandatory credit card payments as required by the new bankruptcy law.

The seventh, eighth and ninth men all previously traded up their
homes for McMansions that they can not afford with interest only
payments of $2300 a month. When foreclosures start happening their
plans on flipping their McMansions and cashing in on the equity slips
through their fingers.

To make matters worse seven and eight get laid off from the
companies they work for when their jobs get outsourced to China. The
ninth man keeps his job at a law firm, but fails to notice that his
401k fund is slipping and has lost 10% in the last year. Things are
looking up as his law firm seems on the edge of landing a big contract
with Merrill Lynch.

Then the real estate crash and sub prime mortgage scandal erupt.
Banks start dropping like flies to be saved not by the cash strapped
government that can barely afford the war for oil any longer, but by
China. Oil and Gold soar, Gold hits $900 a troy ounce and Oil hits
$130 a barrel (about the same amount for 10 rounds of beer prior to
the crash). Beer prices hold steady for the first few months, but then
start to edge up as gas prices for delivery creep into the bar owners
expenses.

Then the first four men one night remember their favorite bar.
They sneak around back around 4:30 am and steal 50 empty kegs that
just happen to be made of pure aluminum. Those kegs are now worth
about half the value of a keg that is full in scrap metal prices or
about $80.

They are not stupid and don=E2=80=99t want to get caught turning the ke=
gs
in at the dump where the police are already looking for keg thieves.
So they head out to the closed down manufacturing plant where they
used to work. They start a big fire, and melt down the aluminum into
big messy aluminum splashes on the cement.

They turn in the aluminum for cash and get caught up on their back
alimony and child support before heading back to work at Wal-mart
where they now work for their teen age kids that beat them out for
that promotion earlier in the month because their job skills weren=E2=80=99=
t
as good as recent high school graduates. They then begin dreaming of
new ways to find aluminum alimony allowances.

Meanwhile, the banks and mortgage companies lobby congress
spending about $10,000 a head in an election year to bail out the
economy. Congress provides the major banks with government backed
loans to refinance the bad sub prime loans so that the government can
personally guarantee those bad loans. They also put $100 billion of
actual cash into the hands of Americans hoping to stimulate the
economy.

Americans however, are all in debt up to their eye balls and use
the extra $1200 they receive to make 2-3 credit card payments. They
take the $300 for each kid and buy groceries for the month and then
they start worrying about next month.

The banks get away free as they have Chinese financing now and no
bad loans as they have refinanced them over to the US Government. The
US government had to print more money to pay for all of these actions
and so Gold goes up to $1500 a troy ounce.

The tenth man is now worth Billions and moves to Costa Rica to
retire taking the new trophy wife that used to be the bartenders girl
friend with him.

The first four men end up going to county prison for 3 months for
stealing aluminum dog crap receptacles after running out of kegs to
steal.

The fifth and sixth men end up living in an apartment and then
homeless after they lose their jobs at Wal-Mart.

Click HereThe seventh and eighth men whom we previously left
hanging in our story after they lost their jobs and ability to pay for
their homes, end up losing their homes, and their kids. They and their
spouses are each convicted of mortgage fraud by the FBI in a major
sting operation after it is revealed that they lied on their mortgage
applications. Their mortgage brokers who actually did the paper work
cop a plea agreement in exchange for immunity with the Feds and rat
out each of their unsuspecting customers.

The ninth man ends up losing his entire retirement fund which took
a big hit as the dollar rapidly plummeted into free fall. He ends up
refinancing his own house under a government backed loan for $650,000.
Unfortunately, a tornado comes through that winter in a freak
coincidence and levels the home. FEMA promises to provide assistance
but never shows up and the ninth man freezes to death attempting to
salvage the shreds of his belongings. His home insurance policy
refuses to pay as they claim that his house was over valued and then
they prove it with comparables studies from his own mortgage brokers
database.

The tenth man ends up dumping his new bride a year later, moving
back to the states a year after that when the US appears to have hit
rock bottom and he leads up a Chinese real estate investment
initiative in the states. He makes another $10 billion in ten years,
but is then executed in Beijing for espionage.

Meanwhile, the bar tender goes on to win American Idol and sleep
with Paula Abdul. They are now blissfully happy, doped up on anti-
psychotics, and the biggest two idiots the world has ever seen.

EDIT =E2=80=93 Note this article is not written to refute the article
titled =E2=80=98How Tax Cuts Work=E2=80=99 by David R Kamerschen. That is b=
ecause
David R Kamerschen refutes having ever written the original! This is
just an article to expand on the concept of the original article
written by an unknown viral writer.

"Matt" wrote in message news:[email protected]...

> I received this broadcast email thought I would share it as it might
> provide some humour

> At last the tax system explained such that we can understand.

Bumper-sticker politics can certainly be fun, but rarely useful, especially
when they rely on forgery (as so so many of these examples of chain e-mail
cracker barrel wisdom).

http://davidk.myweb.uga.edu/

"Contrary to Internet folklore, Dr. Kamerschen is NOT the author of "Tax
Cuts: A Simple Lesson in Economics" or “Bar Stool Economics” or anything
similar to that."

Besides, you forgot the part about the richest guy using loopholes in the
tax code arranged by his corporate lobbyists to not only pay no taxes, but
get a subsidy from the govt.

Herein lies a great lesson -- government adds no value to beer
drinking -- nor anything else it's involved in.

Matt wrote:
> I received this broadcast email thought I would share it as it might
> provide some humour
>
> At last the tax system explained such that we can understand.
>

Another beer analogy:

http://www.daybydaycartoon.com/2011/01/29/#005963