Barack's Rebate: A Practical Application

Over at Protein Wisdom, the best blog even located on Al Gore's wonderful information super highway, JD makes this comment on a post by Jeff Goldstein:

Suppose that every day, ten men go out for beer, and the bill for all ten comes to $100. If they paid their bill something like we pay our taxes, it would go something like this.

The first 4 men, the lowest earners, would pay nothing.
The 5th would pay $1.
The 6th would pay $3.
The 7th would pay $7.
The 8th would pay $12.
The 9th would pay $18.
The 10th would pay $59.

These 10 men drank at the bar every day and were quite content with the arrangement, until one day, the owner threw them a curve.

“Since you are all such good customers, I’m going to take $20 off of your bill every time you come in.”

So, their drinks went from $100 to $80.

The group still wanted to pay their bill the way we pay taxes so.

The first 4 men were still unaffected, they still drank for free.
But what about the other 6 men?

How could they divide this windfall so everyone got their fair share?

They originally wanted to divide it 6 ways, $3.33 a man, but if they did it that way, the 5th and 6th man would wind up getting paid to drink beer.

The owner suggested that they distribute the saving like they distributed the costs.

In the new scenario
The first 4 still paid nothing.
The 5th now also paid nothing.
The 6th dropped to $2 from $3, a 33% reduction.
The 7th dropped to $5 from $7, a 28% reduction.
The 8th dropped to $9 from $12, a 25% reduction.
The 9th dropped to $14 from $18, a 22% reduction.
The 10th dropped to $49 from $59, a 16% reduction.

Each of the 6 taxpayers was better off than they were before. The first 4 continued to drink for free.

When they left, they began to compare their savings.

I only got $1 out of the $20, said the 6th man.
Then he pointed at the 10th man, and said “But he got $10!”

The 5th man, now drinking for free, said “Yeah, I only saved $1 too, it is not fair he got 10 times what I did.”

The 7th man said “Why should I only get $2 back when he gets $10 back, the rich always get all the breaks!”

The first 4 men, in unison, said “Wait. We got nothing at all. Why are you exploiting the poor?”

The 9 men surrounded the 10th man and beat him up.

The next night, the first 9 men showed up for drinks. The 10th did not. They had their drinks, and when the bill came, they did not collectively have enough money to pay even half the bill.

Somehow, I bet Baracky would find a way to get a profit into the pockets of those that were not paying anything, and being oppressed by this unjust system of taxation.

In Baracky's system, 95% of all tax filers will receive a rebate. This greedy bar owner should consider paying the first guys for gracing his establishment.

For fairness.