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Bar Stool Economics

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 r 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 o f $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.

David R. Kamerschen, Ph.D.
Professor of Economics, University of Georgia

For those who understand, no explanation is needed.
For those who do not understand, no explanation is possible.

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October 28th, 2008 Posted by Mark | Announcements, Gossip, Joke of the Day, politics | no comments

Email Response From Governor Schwarzenegger

Hello Neighbors! I wanted to share with you the email response I received from Governor Schwarzenegger regarding his veto of AB2270 (the water softener bill)…

Thank you for writing to urge that I veto AB 2270. I appreciate your active participation in the democratic process, and I value your suggestions on how government can better serve the people of California.

I am pleased to inform you that I vetoed this bill after extensive consideration and thorough deliberation of arguments from both supporters and opponents of this issue. The provisions of this bill create a system that could unduly limit choices for consumers and small water systems and would have little positive impact given the limited contribution of water softeners to our salinity problems. My veto message for this legislation may be found on the Official California Legislative Information website: www.leginfo.ca.gov.

Again, I appreciate hearing your opinion on legislation that affects the future of our great state. Taking the time to communicate your views and offer suggestions is essential to good citizenship and good government.

Sincerely,

Arnold Schwarzenegger

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October 16th, 2008 Posted by Mark | Announcements, Gossip | no comments

Halloween Party!

Hi All!

Blair and I along with Amee, Lily, Jen and the gang’s help are going to host the halloween the party.
Up at our place! 16244 Paradise Valley Ct. Yahoo can map us! 10/25 – 7pm to ??
Dress to kill! (Costumes!)
Sorry it’s last minute, hope you can all come!

Yumi

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October 10th, 2008 Posted by byromero | Activities, Announcements, Party | no comments

Governor Arnold Schwarzenegger Vetoes AB 2270!

News Update: On September 30, 2008, Governor Arnold Schwarzenegger vetoed bill AB 2270. In his veto statement, the Governor said that the legislation would “create a system that could unduly limit choices for consumers and small water systems, with potentially little positive impact given the relatively limited contribution of water softeners to our salinity problems.”

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October 6th, 2008 Posted by Mark | Announcements | no comments

AB2270 Bill Passes Legislature, Only a Veto Can Stop It Now

Sign the petition!

Dear Friend,

UPDATE on AB 2270, the bill that could allow unelected bureaucrats to ban water softeners in your home and your neighborhood. The bill has moved from the legislature and now sits on the Governor’s desk and we need your help in letting the Governor know the risks involved in this bill.

AB 2270 is bad policy that must be stopped. This bill violates property rights and would allow government to come into one’s home and remove an appliance. Banning and removing home water softeners will not solve California’s water salinity problems.

Call Governor Schwarzenegger TODAY at 916-445-2841 OR click here to email his office. Tell the Governor to “VETO AB 2270 and Save My Softener” or you may use the suggested text below.

Thank you.

Email your legislator now! (use this sample text)

As my Governor, I urge you to vote NO on AB 2270.

If passed, this bill would cause environmental harm (hard water requires more soap and detergent for all cleaning applications, directly putting more chemicals back into the environment).

Also, this bill would allow the government to intrude into a private residence and remove an appliance.

California has more important problems to solve at the moment…please VETO AB 2270!

Email your legislator now!