Monthly Archives: November 2017

The Tax System Explained in Beer

 
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 ball. “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 men would 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 ? 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 a higher percentage the poorer he was, to follow the principle of the tax system they had been using, and he proceeded to work out the amounts he suggested that each should now pay.

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Four score and seven years ago our fathers brought forth on this continent, a new nation, conceived in Liberty, and dedicated to the proposition that all men are created equal.
 
Now we are engaged in a great civil war, testing whether that nation, or any nation so conceived and so dedicated, can long endure. We are met on a great battle-field of that war. We have come to dedicate a portion of that field, as a final resting place for those who here gave their lives that that nation might live. It is altogether fitting and proper that we should do this.
 
But, in a larger sense, we can not dedicate — we can not consecrate — we can not hallow — this ground. The brave men, living and dead, who struggled here, have consecrated it, far above our poor power to add or detract. The world will little note, nor long remember what we say here, but it can never forget what they did here. It is for us the living, rather, to be dedicated here to the unfinished work which they who fought here have thus far so nobly advanced. It is rather for us to be here dedicated to the great task remaining before us — that from these honored dead we take increased devotion to that cause for which they gave the last full measure of devotion — that we here highly resolve that these dead shall not have died in vain — that this nation, under God, shall have a new birth of freedom — and that government of the people, by the people, for the people, shall not perish from the earth.
 
Abraham Lincoln
November 19, 1863

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As I’m sure you’re aware, serious tax reform is under consideration in Congress. Many believe tax relief will make America more business-friendly, ease the financial burden on American families, and improve the lives of Americans. And as you know, Hillsdale teaches the fundamental principles of freedom, which are required for free-enterprise and the entrepreneurial spirit to flourish.

For the past decade, many of our economic policies have defied basic free-market principles. What’s worse, these policies represent a return to the idea repudiated by the American Revolution—that some are equipped by nature or training to manage the lives of others without their consent.

I had the privilege of teaching on this subject in one of our online courses, “Economics 101: The Principles of Free Market Economics.” I thought I would share this free course with you to deepen your understanding as Congress votes in the coming weeks.

I hope this course enriches you as our country continues to work towards freer markets and economic prosperity.

You can enroll in this course now here: https://lp.hillsdale.edu/economics-101.

Warm regards,

Larry P. Arnn
President, Hillsdale College

The Reagan Club meets on the first Thursday of every month at The Amazing Grace Community Church ( 541 E 99th Pl, Thornton, CO, 80229) from 6:30 p.m. - 8:30 p.m. with doors open at 6:00 p.m.. We feature different programs and speakers as we honor the 40th President. The Reagan Club of Colorado seeks to promote the Constitution, smaller government, lower taxes, personal freedom, helping candidates, and educating the public about one of our greatest presidents, Ronald Wilson Reagan.

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