Barstool Economics
Nave Saikiliah
I found this online, and while it is meant for real life, we should certainly take its message to heart in erepublik.
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.
NOTE: Of course, our tax system is not progressive, but wealthier people do pay for a much higher proportion of the taxes. This is, more or less, why protecting the wealthy's interest usually coincides with protecting the economy's interests.
Comments
I would say it is pretty progressive compared to a flat tax.
Cool article, but I don\'t think it relates to erepublik all that much. For one, everybody - every company and every citizen (aside from individual regional taxes) gets taxed the same amount. I\'m sure in V1 erep, the tax system will be changed to allow for tax differentials that correspond to different levels of income, which would definitely be interesting.
One thing though...
If the guys that don\'t pay for the beer at all suddenly started to pay for these beers, wouldn\'t they have saved up enough money to be financially set 😛?
@Benn: Even if it is flat, the wealthy pay a much higher proportion of the taxes, mostly because they have more money that CAN be taxed.
i like the article and it enlightens me, however like Benn said it\'s not that much erep relevant.
interesting concept though
I believe in a Pay As You Go Tax system (Huckabee For President)... I want my whole paycheck and I\'ll decide to pay taxes whenever I purchase something (NEW). If I want a New Car, I\'ll pay the taxes. If I want a Used Car, I pay nothing. Taxation should be Progressive, not Regressive. Taxing based on percentages means the poor pay more and the rich pay peanuts as a percentage of income. What\'s $25/million in taxes if you earn $100/million? You\'ll still have $75/million. But what\'s $5,000 when you only earn $20,000? With the things each person can purchase, the $5,000 means a whole lot more than the $25/million if a Honda costs only $20,000 or a house costs $250k. The rich can buy it out right and the poor spend all their money on a single possession with nothing left over.
I believe this country needs a Progressive tax system where taxes are taken at the point of sale, not first-dibs on your income. Not to mention, a regressive tax system allows the Government to dictate winners and losers through tax loopholes. Whereas under a Progressive system, the Government has no such power because you, the Individual, dictates the time and place taxes will be paid. Much like our founding fathers. Income Taxes didn\'t exist prior to the 20th century.
In eRepublik, I believe the President and Congress should first vote on if we should have a Progressive or Regressive Tax System. Then once that is established, functions within each tax code can be debated and implemented.
@Alby: \"What\'s $25/million in taxes if you earn $100/million? You\'ll still have $75/million.\"
The thing is, if I lose 25 million dollars because of taxes, I am going to look into going to a different country where I can earn another 10 million or so. And if I move, then the US economy loses $100 million, all for an extra bit of taxes.
\"If I want a New Car, I\'ll pay the taxes. If I want a Used Car, I pay nothing.\"
That\'s an interesting subject, but the problem with that is it just gives incentives to buy used, which is good for the environment but not for the economy. Which one are you more a fan of? 😉
Nobody goes to class in college Emerick.
I\'m in class right now lol
traitor to the cause of lording collegiate mystique! i bite my thumb at you sir!
*is offended*
Welcome back NAVE!!!! I did read this and cannot offer very much of an opinion on the matter LOL- it sounds sound but I wouldn\'t know. It\'s good to see you writing again and back in eUSA 🙂
lol good stuff. I think i\'ve read this before somewhere ^__^
tisk tisk eMerick. what college do you go to?
That\'s why I\'m poor.
God, this article is right wing garbage. The person who wrote this is obviously a right winger, blah blah, protect the rich, blah blah. He/She doesn\'t mention all the tax cuts and benefits that richer people get and the tax loopholes they can take advantage of to avoid paying taxes in the first place. Sure rich people are important but it is stupid and banal to make the \"poorer\" people just seem like a stupid mob.
Garbage.
@Mikaleus: Well, I\'m not right wing, and I know a thing or two about economics. Yeah, sure, there is some tax evasion, but there is also abuse of the system on the opposite end of the spectrum. The point is, you want to keep the rich people in the country.
@ Nave, oh I definitely agree with you there, rich people are important to a certain extent. I\'m not criticizing you, you didn\'t write it. I\'m just annoyed at the tone of the article. It portrays the poorer people like a mob. In reality I believe the upper class and lower class really live off of the middle class. Although the article is amusing it is ultimately right wing propaganda and I disagree with the article.
Awesome. Truly awesome. Gotta love it.
For me, it is a very interesting article. I consider myself a far-left person, almost Anarchic. I criticize upper class and view rich as snobs.
Very, \"young\" view of the world, but hey, that\'s me.
But I really like that article. It shows that the upper class may not be in it to shove the poor under the looming boot of theirs. However, if you try to make the point that the rich actually have a heavy burden to wear, I would disagree. They are already well-off and comfortable with their existence and any sort of \"boulder on their back\" is merely a \"Backpack\" to the struggle the poor has.
Au Revoir.
Nice Article, look at the soldiers article also in the news paper The Erepublik Times
Taxing due to having more capital discourages incentives for capital gains. Especially in business; if a certain segment (ie. oil) becomes taxed heavily, less is produced , innovation stagnates and prices rise. Why? Profits encourags competition into a business segment. This competition brings with it innovation, removes monopolies and drives prices down through competion itself. Not to mention that increased taxation costs are passed back to the consumer.
Alby; Mikaleus; Taylor the Noir: The essential premise to this article is that growth and investment is driven by the wealthy in a capitalist economy. The notion of \"rich as evil\" is a product of non-capitalistic economies of the past that has no bearing on today\'s market. Let\'s think here about two Bills..., Bill Gates and Bill Cosby. Both are now wealthy yet did not start that way. Alby: you idea that 25% off of $100 million is no harm to the person; imagine the loss of investment driven growth that is provided. Plus the taxes on the wealthy reach far beyond just payroll earnings.
...but that\'s just my nine cents.
apparently irl economics is \'right wing garbage\' ...
No, YOU\'RE right wing garbage!
*runs away crying*
Great article - I\'m new here, and I am enjoying it.
According to your article, would trickle-down economics promote a healthier eRepublik economy? Is it fair to say this is your conclusion? I would have to say that IRL \"voodoo\" economics is b/s. But in this game to me it seems to make sense. The rich obviously are much more *active and established players, as well. *Generally.