Illustration of our Tax System

I rarely post something that I get in an email, but one of the smartest guys I know sent this to me, and I found this explanation of our tax system both comical and sobering at the same time.

This was written by Professor David Kamerschen, PhD with University of Georgia's Department of Economics.

So, here goes...


A brilliant explanation of the US tax system using actual percentages, and the impact of a tax cut.

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.

Church Attendance and Prayer

I had the opportunity to comment on a blog referred to by my good friend and colleague Brian Cork. This particular post asked the question why people attend church and why do they pray. The posit was that it was an indicator of weakness, not strength, that people would engage in such activities. I disagree.

Below is the response I provided. What do you think?


I won’t purport by any means to be an expert on the subject, but one that has years of experience on it. So I’ll take a quick moment to share why I pray first, and then why I attend church.

I acknowledge the existence of a higher power, and have chosen to live my life based on a specific theology around that higher power. Part of that involves communion between that power and myself. Now, that higher power, if it truly exists as I believe, is worthy of my time and my praise and thankfulness. And I do that through prayer.

I do ask for guidance and wisdom, since I believe I can acquire knowledge on my own, but that wisdom requires divine intervention. But I’ve learned over the years that seeing the one I serve as a “fairy godfather” both a)diminishes their true value and worth, and b)leaves me disappointed and ultimately weak if my only dependency is to receive a blessing out of my typically self-inflicted circumstances.

So…why do I go to church? It is an opportunity for me to learn more about what I believe, and have it be challenged and strengthened. I don’t go into it blindly; I don’t accept everything I hear. But I do get to hear from others’ perspective how they are working along their road of reconciling their heart and their mind. I also benefit greatly from the gathering of those that share similar interests and convictions in that context. Much like what I receive by attending sales meetings for my firm, or sessions around business strategy.

Am I the wealthiest man on earth? Depends on your measure of wealth. I have a great family, live in a wonderful city, have lots of friends, and a satisfying career.

Does my allegiance to this higher power mean that I am spiritually insecure? If insecurity means that there is something beyond me that I cannot control, then yes I am.

Am I secure in what I believe? Well, that’s part of the journey now, isn’t it…

And one day, I hope to be.

Generosity - One For the Kids

A few weeks ago, I had the opportunity to be in Las Vegas and stay at the amazing Bellagio. I hadn't been there since 2003, when MGM was a client of mine at Yahoo!, and was utterly amazed at this place. And I didn't even watch the water show.

On my first morning there, I went to have breakfast at Cafe Bellagio. Being on my own, I straddled up to the counter and grabbed one of the few empty seats. After ordering what would later be remembered as an amazing breakfast, I sat back and began to read the local paper. Sitting to my right was a man, and next to him was an attractive woman that I can only estimate was on his list for the day's flirting, Vegas style. The two of them were engaging in very light conversation for a while, and then somehow the conversation turned when the woman started talking about her recently departed father.

She was recounting her father's struggle with cancer, and her struggle in growing up with a father who never loved her in the way she wanted. Despite years and years of "putting herself out there" and summarily getting slapped down, her father would never meet her expectations and desires for loving her. So what was her insufferable demand of the family patriarch?

A simple, "I love you".

That's right. All this woman wanted was for her father to say those three little words, particularly after she had uttered the same to him first. However, for some reason this father decided that he could not do that for her little girl. Finally, on one of his last days, as she normally would, told him that she loved him. And then she started to walk out. After all, why would this day be any different than the thousands of others that preceded it.

"Wait a second...come back over here for a moment please."

What? Oh, he must need something else. Maybe some water or for me to change the channels on the TV. So she walked back over to her father's side as he lay in bed.

He then said, "You know I've always loved you deeply. I just don't, you know, say those types of things". She replied, "I know, Daddy. Thank you for saying it now, though."

Three days later he died.

I couldn't help but think about how selfish this father was to her daughter. Sure, I am sure he provided for her. I am sure he never physically abused her. But when it came to being generous with his love in a way that would be utterly meaningful for his daughter, he chose instead to be selfish and greedy. Would it have been hard for him? Would he have rather done something else? Of course, but then, that's what generosity is. It's giving something that we have up for someone else, without any strings attached.

So, I'll go ahead and make a call out to all my friends who are dads. Tell your kids you love them. Tell them often. Tell them even when they roll their eyes at you and say, "DAAAAD! Don't embarrass meeee!!!" Because it doesn't matter whether you want to or not, or whether it's comfortable for you or not.

And that's because it's not about you.

That's the indicator of true generosity...