U.S. Income Taxation Explained with Beer

In a nutshell, it offers a very simple and somewhat humorous analogy
of how the U.S. income tax system works by comparing it to the
responses of ten beer-drinking men.
Since our Presidential electionis less than 1 day away I thought it
might be appropriate to consider income tax policy from a
non-partisan, "middle class" perspective. You might even learn
something about tax cuts and taxing the rich and all those other
political buzzwords.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 real 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. (Numerically) 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.