# The Republicans have lost their mind **URL:** \ **Category:** The BBQ Pit\ **Created:** [September 26, 2008, 10:47am UTC](https://boards.straightdope.com/t/the-republicans-have-lost-their-mind/465308 "2008-09-26T10:47:47Z")\ **Posts on this page:** 20\ **Page:** 2
**Author:** ![XT](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/xt/32/456_2.png) [@XT](https://boards.straightdope.com/u/XT)\ **Post date:** [September 26, 2008, 2:25pm UTC](https://boards.straightdope.com/t/the-republicans-have-lost-their-mind/465308/21 "2008-09-26T14:25:13Z")
I got this in an email the other day and thought it was amusing…so, figured I’d post it here since there is no serious discussion going on, just another uninformed knee jerkage. > [@](#): > > 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. > > David R. Kamerschen, Ph.D. > Professor of Economics, University of Georgia I love bar room economics and comic book style explanations…which seem to be the level that most threads are going these days on this board. Well…'cept from the other direction. Enjoy! -XT ---
**Author:** ![GIGObuster](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/gigobuster/32/421_2.png) [@GIGObuster](https://boards.straightdope.com/u/GIGObuster)\ **Post date:** [September 26, 2008, 2:42pm UTC](https://boards.straightdope.com/t/the-republicans-have-lost-their-mind/465308/22 "2008-09-26T14:42:32Z")
> [@xtisme](#): > > I got this in an email the other day and thought it was amusing…so, figured I’d post it here since there is no serious discussion going on, just another uninformed knee jerkage. > > I love bar room economics and comic book style explanations…which seem to be the level that most threads are going these days on this board. Well…'cept from the other direction. > > Enjoy! > > -XT You had me until the part he was beat up, you know, something silly like the rule of law many times prevents this (a system paid with the tab too), meanwhile leaving aside your comic book explanation, the current reality is that I see the many companies moving over seas are still sucking at the governments teat and taking the money that the other suckers paid. Of course since there is less of a rule of law out there they could be stoned to death overseas, a small price to pay in the short run for the comic guy it seems. ---
**Author:** ![Snowboarder\_Bo](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/snowboarder_bo/32/229_2.png) [@Snowboarder\_Bo](https://boards.straightdope.com/u/Snowboarder_Bo)\ **Post date:** [September 26, 2008, 2:43pm UTC](https://boards.straightdope.com/t/the-republicans-have-lost-their-mind/465308/23 "2008-09-26T14:43:06Z")
wow, [that was really brilliant](http://www.snopes.com/business/taxes/howtaxes.asp), **xtisme** :rolleyes: Quick! Call the White House and let them know that Don Dodson is ready to help! He understands what’s _really_ going on! :dubious: :smack: ---
**Author:** ![MichaelQReilly](https://avatars.discourse-cdn.com/v4/letter/m/df705f/32.png) [@MichaelQReilly](https://boards.straightdope.com/u/MichaelQReilly)\ **Post date:** [September 26, 2008, 2:48pm UTC](https://boards.straightdope.com/t/the-republicans-have-lost-their-mind/465308/24 "2008-09-26T14:48:19Z")
> [@Sinaijon](#): > > Dude, you know that you’d need to be making \> $100K before your total effective tax rate is even close to 30%, right? > > Try this page: [Tax Brackets (Federal Income Tax Rates) 2000 through 2026](http://www.moneychimp.com/features/tax_brackets.htm), then come back. I know, I tried to acknowledge that fact with 6 figure parenthetical in my original post. I didn’t want details to get in the way of my rant. ---
**Author:** ![XT](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/xt/32/456_2.png) [@XT](https://boards.straightdope.com/u/XT)\ **Post date:** [September 26, 2008, 2:51pm UTC](https://boards.straightdope.com/t/the-republicans-have-lost-their-mind/465308/25 "2008-09-26T14:51:34Z")
[QUOTE=Snowboarder Bo] wow, that was really brilliant, xtisme [/QUOTE] Ah…you seem to be laboring under the mis-understanding of what I was posting there…and why. For the humor impaired this was what is commonly referred to as ‘a joke’. But I thank you for kind words of my brilliance. I bask in the glow of your regard…and snort with mirth at the fact that you didn’t get it. -XT ---
**Author:** ![GIGObuster](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/gigobuster/32/421_2.png) [@GIGObuster](https://boards.straightdope.com/u/GIGObuster)\ **Post date:** [September 26, 2008, 2:51pm UTC](https://boards.straightdope.com/t/the-republicans-have-lost-their-mind/465308/26 "2008-09-26T14:51:37Z")
> [@Snowboarder\_Bo](#): > > wow, [that was really brilliant](http://www.snopes.com/business/taxes/howtaxes.asp), **xtisme** :rolleyes: > > Quick! Call the White House and let them know that Don Dodson is ready to help! He understands what’s _really_ going on! :dubious: > > :smack: Wow, that was certified “uninformed knee jerkage” have you lost your mind too **xtisme**? 🙂 On preview: but the joke is the current republican tactics, if you want to throw more examples of their silly ways of thinking be my guest. ---
**Author:** ![XT](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/xt/32/456_2.png) [@XT](https://boards.straightdope.com/u/XT)\ **Post date:** [September 26, 2008, 2:53pm UTC](https://boards.straightdope.com/t/the-republicans-have-lost-their-mind/465308/27 "2008-09-26T14:53:06Z")
😛 I never had it to lose… -XT ---
**Author:** ![Really\_Not\_All\_That\_Bright](https://avatars.discourse-cdn.com/v4/letter/r/e8c25b/32.png) [@Really\_Not\_All\_That\_Bright](https://boards.straightdope.com/u/Really_Not_All_That_Bright)\ **Post date:** [September 26, 2008, 2:58pm UTC](https://boards.straightdope.com/t/the-republicans-have-lost-their-mind/465308/28 "2008-09-26T14:58:00Z")
Just FTR, the guy mentioned on Snopes didn’t write the beer/tax thingy, and neither did [the guy at UGA](http://davidk.myweb.uga.edu/) that the version **xt** got quoted: > [@](#): > > Complete vitae available online. Contrary to Internet folklore, Dr. Kamerschen is NOT the author of “Tax Cuts: A Simple Lesson in Economics.” Additionally, he does NOT know who wrote it. ---
**Author:** ![Digital\_Stimulus](https://avatars.discourse-cdn.com/v4/letter/d/aeb1de/32.png) [@Digital\_Stimulus](https://boards.straightdope.com/u/Digital_Stimulus)\ **Post date:** [September 26, 2008, 3:15pm UTC](https://boards.straightdope.com/t/the-republicans-have-lost-their-mind/465308/29 "2008-09-26T15:15:07Z")
> [@threemae](#): > > The only proposed cuts to capital gains taxes that I am aware of are restricted to investments in the current pool of illiquid troubled housing backed securities. I realize that the above is not really being considered, so I wanted to ask for a little more light on it. _If_ that’s the case, what would be the effect? Here’s the way I see it: the securities in question are risky (i.e., likely to contain many bad loans; part of what makes them risky are that the valuations are sketchy at best). By cutting the captial gains taxes _only on these securities_, they become more attractive to buyers. That is, the possible benefit becomes higher, which mitigates some of the risk. And if these securities are bought, they would no longer be a drag on their current owners’ portfolios, thus putting the owners’ on more sound financial footing (i.e., hopefully freeing up some capital). If I have that right, I’m not seeing why this is such a bad idea. Make the risk more palatable to some such that they willingly assume the burden, relieving the troubled institutions of some problems. Do I have that right? ---
**Author:** ![Grumman](https://avatars.discourse-cdn.com/v4/letter/g/43a26b/32.png) [@Grumman](https://boards.straightdope.com/u/Grumman)\ **Post date:** [September 26, 2008, 3:53pm UTC](https://boards.straightdope.com/t/the-republicans-have-lost-their-mind/465308/30 "2008-09-26T15:53:55Z")
> [@Snowboarder\_Bo](#): > > wow, [that was really brilliant](http://www.snopes.com/business/taxes/howtaxes.asp), **xtisme** :rolleyes: What was the point of that link? **Xtisme** wasn’t pretending to have written it himself or anything like that, so why post a link to a page which only deals with the question of authorship? ---
**Author:** ![pulykamell](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/pulykamell/32/3166_2.png) [@pulykamell](https://boards.straightdope.com/u/pulykamell)\ **Post date:** [September 26, 2008, 4:08pm UTC](https://boards.straightdope.com/t/the-republicans-have-lost-their-mind/465308/31 "2008-09-26T16:08:57Z")
> [@Sinaijon](#): > > Dude, you know that you’d need to be making \> $100K before your total effective tax rate is even close to 30%, right? > > Try this page: [Tax Brackets (Federal Income Tax Rates) 2000 through 2026](http://www.moneychimp.com/features/tax_brackets.htm), then come back. Add in state tax and self-employment tax (for individuals like me), and you don’t have to be anywhere near $100K to be paying 30% taxes. Looking at last year’s tax return, the amount I paid in taxes was 34.7% of my adjusted gross income, and that number is nowhere near $100K. ---
**Author:** ![RickJay](https://avatars.discourse-cdn.com/v4/letter/r/bb73d2/32.png) [@RickJay](https://boards.straightdope.com/u/RickJay)\ **Post date:** [September 26, 2008, 4:26pm UTC](https://boards.straightdope.com/t/the-republicans-have-lost-their-mind/465308/32 "2008-09-26T16:26:26Z")
> [@The\_Walking\_Dude](#): > > Let me also point out, for those of you still thinking the little man is getting screwed, that this increase in investment will generally causing a lowering of the interest rate. This will generally slow down inflation. Well, that’s funny. I took a whole darned degree in economics, passed all my courses, and don’t ever remember being taught either of these things. 1. Why in God’s name would an increase in investment necessarily lower the interest rate? 2. And since when did lowing the interest rate - which is up to the central bank, not the stock market - lower inflation? Historically, and logically by the way, the OPPOSITE is true; dropping the interest rate runs the risk of contributing to inflation, because it results in the creation of more money. Your cart is before your horse; if infation drops, then the central bank will (sometimes) lower interest rates accordingly, because presumably the risk of some inflation is mitigated. ---
**Author:** ![hawthorne](https://avatars.discourse-cdn.com/v4/letter/h/c89c15/32.png) [@hawthorne](https://boards.straightdope.com/u/hawthorne)\ **Post date:** [September 26, 2008, 4:59pm UTC](https://boards.straightdope.com/t/the-republicans-have-lost-their-mind/465308/33 "2008-09-26T16:59:14Z")
Better yet, **The Walking Dude** , I’m a professional economist who’s published tax policy articles in good journals and taught public finance courses and… you know less than nothing. There _are_ economists who think that taxes on capital income should be lower than on other forms of income (I’m one of them, but I don’t buy the whole expenditure tax program - I’m a decoupling guy). But most economists think that capital gains should be taxed the same as other forms of capital income and that preferring capital gains to other forms of capital income is distorting and _at best_ an entirely ineffective way of promoting economic growth. Your other remarks lack sufficient coherence to qualify as even wrong. ---
**Author:** ![Zebra](https://avatars.discourse-cdn.com/v4/letter/z/c0e974/32.png) [@Zebra](https://boards.straightdope.com/u/Zebra)\ **Post date:** [September 26, 2008, 5:09pm UTC](https://boards.straightdope.com/t/the-republicans-have-lost-their-mind/465308/34 "2008-09-26T17:09:05Z")
Maybe instead of taxing capitol gains 15%, we should just pay them 5%? Then everybody gets a share. Just like Milo said. ---
**Author:** ![Really\_Not\_All\_That\_Bright](https://avatars.discourse-cdn.com/v4/letter/r/e8c25b/32.png) [@Really\_Not\_All\_That\_Bright](https://boards.straightdope.com/u/Really_Not_All_That_Bright)\ **Post date:** [September 26, 2008, 5:25pm UTC](https://boards.straightdope.com/t/the-republicans-have-lost-their-mind/465308/35 "2008-09-26T17:25:22Z")
> [@Zebra](#): > > Then everybody gets a share. Just like Milo said. Fine, but you’re not stealing my bedsheet. ---
**Author:** ![garygnu](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/garygnu/32/2924_2.png) [@garygnu](https://boards.straightdope.com/u/garygnu)\ **Post date:** [September 26, 2008, 5:30pm UTC](https://boards.straightdope.com/t/the-republicans-have-lost-their-mind/465308/36 "2008-09-26T17:30:36Z")
Now isn’t the best time to give scared investors any extra reasons to pull their money out of the stock market. I’m not in favor of a cut, but capital gains is scheduled to go up at the end of the year to 25%. Keep them at 15%. ---
**Author:** ![wring](https://avatars.discourse-cdn.com/v4/letter/w/838e76/32.png) [@wring](https://boards.straightdope.com/u/wring)\ **Post date:** [September 26, 2008, 6:37pm UTC](https://boards.straightdope.com/t/the-republicans-have-lost-their-mind/465308/37 "2008-09-26T18:37:56Z")
> [@Really\_Not\_All\_That\_Bright](#): > > Just FTR, the guy mentioned on Snopes didn’t write the beer/tax thingy, and neither did [the guy at UGA](http://davidk.myweb.uga.edu/) that the version **xt** got quoted: Maybe WallyM7 did? ---
**Author:** ![Oy](https://avatars.discourse-cdn.com/v4/letter/o/bc8723/32.png) [@Oy](https://boards.straightdope.com/u/Oy)\ **Post date:** [September 26, 2008, 7:08pm UTC](https://boards.straightdope.com/t/the-republicans-have-lost-their-mind/465308/38 "2008-09-26T19:08:37Z")
My problem with the “reduce capital gains tax and stimulate investment” argument (aside from the fact that obviously people do continue to invest when taxes are higher because what else are they going to do with their money?) is that so much of that money ends up in “financial services,” which is to say things that produce neither goods nor services nor create much of anything in the way of jobs. Like these default credit swaps. They add to the economy in bookkeeping money. But they don’t add anything real. And that’s so much of what investment is today. I wish there were a way of separating out investments that were attached to real stuff from investments that weren’t, but of course where you draw the line is extremely fuzzy. In any case, there was no recession when Clinton was in office, and I don’t expect anything but bitching and moaning if the capital gains tax reverts to 2000 levels in 2009. Those with capital will continue investing that capital, because in general that pays better than stuffing it in a mattress. Maybe we’ll get lucky and they’ll invest it in something tangible, like green energy. ---
**Author:** ![Really\_Not\_All\_That\_Bright](https://avatars.discourse-cdn.com/v4/letter/r/e8c25b/32.png) [@Really\_Not\_All\_That\_Bright](https://boards.straightdope.com/u/Really_Not_All_That_Bright)\ **Post date:** [September 26, 2008, 7:27pm UTC](https://boards.straightdope.com/t/the-republicans-have-lost-their-mind/465308/39 "2008-09-26T19:27:16Z")
> [@Oy](#): > > Like these default credit swaps. They add to the economy in bookkeeping money. But they don’t add anything real. And that’s so much of what investment is today. Default credit swaps don’t create anything, but they don’t cost anything either. ---
**Author:** ![Oy](https://avatars.discourse-cdn.com/v4/letter/o/bc8723/32.png) [@Oy](https://boards.straightdope.com/u/Oy)\ **Post date:** [September 26, 2008, 7:39pm UTC](https://boards.straightdope.com/t/the-republicans-have-lost-their-mind/465308/40 "2008-09-26T19:39:17Z")
> [@Really\_Not\_All\_That\_Bright](#): > > Default credit swaps don’t create anything, but they don’t cost anything either. I’m not trying to be pugnacious; I honestly don’t know the answer to this. How come the estimated value of these is $40-$70 trillion and it would appear that they are the primary thing that’s going down the tubes? Or at least so I recall from another thread, and it was backed up by a cite from at least one mainstream economist. [Previous page](https://boards.straightdope.com/t/the-republicans-have-lost-their-mind/465308.md?page=1) [Next page](https://boards.straightdope.com/t/the-republicans-have-lost-their-mind/465308.md?page=3)