Sharing the bar bill

[SRMoore]

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?
The paying customers?

How could they divide the £20 windfall so that everyone would get his fair share?

They realised 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.

And so the fifth man, like the first four, now paid nothing (100% saving).

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

The seventh now paid £5 instead of £7 (28% saving).
The eighth now paid £9 instead of £12 (25% saving).

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

The tenth now paid £49 instead of £59 (16% saving).

Each of the six was better off than before. And the first four continued to drink for free. But, once outside the bar, the men began to compare their savings.

"I only got a pound out of the £20 saving," 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 pound 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 got only £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 night 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 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 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.
(Apparently attributable to the above)

[Stig of the Seaton Dump]

If things are so good overseas then why are they not there already ? I am sure it is not low tax that keeps them here.

[mk1]

The tag line was missed out.
Just after the rich man bought his ticket he got a cheque in the post that gave him back everything he paid in tax in the last 20 years and then some. The  poorest 3 got eviction notices and 9 were told they were going to have to work until they were 75 to help  pay for the rich man's rebate.

[Stig of the Seaton Dump]

The rich guy drinks at Wynyard Hall whilst the poor ones are looking forward to Farmfoods being built so they can afford 50p gammon steaks for tea.

[mk1]

The funniest 'fact' is this is one of those silly emails that circulate on the internet and is in fact a hoax and dates back at least 10 years.

http://www.viralgrapevine.com/how-tax-cuts-work-by-david-r-kamerschen-refuted-the-real-way-tax-work-removing-the-internet-garbage/

[Stig of the Seaton Dump]

I am sure you could also that the casino bankers are essential too as without them we wouldn't have any money in the ATMs.

[steveL]

Can I just add that a former Chief Executive of Barclays Bank, the one before Bob Diamond, when asked about the possibility of bankers leaving the country in droves describes the suggestion as 'utter hogwash'. He left because of the pressure to switch to high risk casino banking which he also described as 'madness'.

According to him, the suggestion that bankers and businesses would go elsewhere was based purely on fiancial considerations ignoring all others such as family, background and culture and any bankers leaving the country would be back within 18 months.

[SRMoore]

The funniest 'fact' is this is one of those silly emails that circulate on the internet and is in fact a hoax and dates back at least 10 years.

http://www.viralgrapevine.com/how-tax-cuts-work-by-david-r-kamerschen-refuted-the-real-way-tax-work-removing-the-internet-garbage/

Yep, you know this explanation of how our tax system is really refuted when it starts with this

In the US and throughout most of the rest of the world, the tenth man would have paid off a politician for $10 to get a beer subsidy of $30 per night

Tin foil hats donned again I see...