The Tax System Explained

[RichtB]

Tax system explained in beer.


Suppose that once a week, 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.

And the tenth man (the richest) would pay £59.

So, that's what they decided to do.

The ten men drank in the bar every week and seemed quite happy with

the arrangement until, one day, the owner caused them a little

problem.

"Since you are all such good customers," he said, "I'm going to
reduce the cost of your weekly 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? 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 not only would the first four men still

be drinking for free but the fifth and sixth man would each end up

being paid to drink his beer.

So, the bar owner suggested that it would be fairer to reduce each

man's bill by a higher percentage.

They decided 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.

And so, the fifth man, like the first four, now paid nothing (a 100%

saving).

The sixth man now paid £2 instead of £3 (a 33% saving).

The seventh man now paid £5 instead of £7 (a 28% saving).

The eighth man now paid £9 instead of £12 (a 25% saving).

The ninth man now paid £14 instead of £18 (a 22% saving).

And the tenth man now paid £49 instead of £59 (a 16% saving).

Each of the last six was better off than before with the first four

continuing to drink for free.

But, once outside the bar, the men began to compare their savings.

"I only got £1 out of the £20 saving," declared the sixth man. He

pointed to the tenth man, "but he got £10."

"Yes, that's right," exclaimed the fifth man. "I only saved £1
too. It's unfair that he got ten times more benefit than me."

"That's true" shouted the seventh man. "Why should he get £10
back, when I only got £2? The wealthy get all the breaks."

"Wait a minute," yelled the first four men in unison, "we didn't
get

anything at all. This new tax system exploits the poor"

The nine men surrounded the tenth and beat him up.

The next week the tenth man didn't show up for drinks, so the nine sat

down and had their 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 to pay

for even half of the bill.

And that, boys and girls, journalists and government ministers, is how

our tax system works.

The people who already pay the highest taxes will naturally get the

most benefit from a tax reduction.

Tax them too much, attack them for being wealthy and they just might

not show up anymore.

In fact, they might start drinking overseas, where the atmosphere is

somewhat friendlier.


For those who understand, no explanation is needed.

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

[Brad76]

Send this to Luthuli house, they'll see two words ie Beer and free

For the rest of the day nobody will sit at the office doing absolutely zero, they'll go do that at the local shebeen!!!

[Sunnyskies]

Send this to the Lodge (where Julia lives - for those still in SA). Benefits are paid for in this country as well and there is a perception that the wealthy get the biggest benefit so they just keep on lowering the point at which you cease to qualify.

[Denzil]

Just loved this!!!!

[Erik]

There is a very practical example of exactly this happening. Can't remember if it was UK or France (think France), where all the rich pretty much upped and left to tax havens after the tax for the wealthy was increased dramatically. The tax revenue fell so drastically that it was shocking! The rich guys said they didn't mind paying more taxes as they were as patriotic as any other citizen, but this was completely ridiculous! Wish i can find that article again...

The most idiotic thing of it all was that they reduced the taxes to stop the rich from taking their money off shore, but something like 10 years later, the government wanted to do exactly the same! Talk about history repeating itself and not learning from your mistakes.

[Erik]

Can't find the article I was thinking of, but this gives a general idea of what happens when the government pisses off the rich and entrepreneurial (and probably for that matter the highly educated professionals). Why would you work your butt of to support the masses...

http://www.forbes.com/sites/realspin/2012/12/18/can-the-last-taxpayer-leaving-france-please-turn-out-the-lights/

[Brad76]

There is a very practical example of exactly this happening. Can't remember if it was UK or France (think France), where all the rich pretty much upped and left to tax havens after the tax for the wealthy was increased dramatically. The tax revenue fell so drastically that it was shocking! The rich guys said they didn't mind paying more taxes as they were as patriotic as any other citizen, but this was completely ridiculous! Wish i can find that article again...

The most idiotic thing of it all was that they reduced the taxes to stop the rich from taking their money off shore, but something like 10 years later, the government wanted to do exactly the same! Talk about history repeating itself and not learning from your mistakes.

I think it was the UK!

[Lynnie]

:ilikeit:

Loved it!!

[OubaasDik]

I think it was the UK!

Seem to remember it was the UK - hundreds (maybe not hundreds) of people (IIRC Rolling Stones) moved offshore to as "tax exiles" ..... some people were paying OVER 100% on certain income ..... WTF!?!?!?!?!

[jm01]

THINK I WILL HAVE MY BEER SOMEWHERE ELSE THEN

[MarkSalter]

What an accurate description of tax. Everyone blames the wealthy, that the poor get exploited, but it is the wealthy people and businesses taxes that pay for more than half the country so that everyone else can get a free ride

[ronfire]

Have to agree. You work your butt off through school and uni, become a professional, work your butt off some more, then the 'gubbermint' gouges out a huge chunk and pays for a bludger to sit at home and drink all day.....

Yes, I'm cynical. I also get pissed off sometimes....

I've given up beer - I wonder who's paying for it now. The 'gubbermint'?