The Tax System

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Mrs Redeyes
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The Tax System

Post by Mrs Redeyes » Wed Oct 27, 2010 8:29 am

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.



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.




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belchingmatt
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The Tax System

Post by belchingmatt » Wed Oct 27, 2010 11:58 am

1st - Why mention Pounds and Dollars in the same sentence?



2nd - I've seen this before and I still don't get it. I just don't get that 1 of every 10 people is paying so much tax that they can almost pay for everyone else.




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Mrs Redeyes
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The Tax System

Post by Mrs Redeyes » Wed Oct 27, 2010 1:51 pm

Hmm, my pedantry bone must be broken, I didn't spot the dollar/? thing.



I haven't worked through the numbers yet so I don't know exactly how it works, but I'll give it some thought when my brains get back <!--emo&:lol:--><img src='http://i2.ifrm.com/html/emoticons/laugh.gif' border='0' style='vertical-align:middle' alt='laugh.gif' /><!--endemo--> Mostly I just wanted to know where it was so I *could* come back to it later <!--emo&:whip:--><img src='http://i2.ifrm.com/4013/140/emo/whip.gif' border='0' style='vertical-align:middle' alt='whip.gif' /><!--endemo-->




--------------------


<div class='signature'>"Why do the people who know the least, know it the loudest?"



"Illegitmi non carborundum est!"



<img src='http://i176.photobucket.com/albums/w165 ... Icon-1.jpg' border='0' alt='user posted image'>
"Why do the people who know the least, know it the loudest?"

"Illegitmi non carborundum est!"

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Zabz
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The Tax System

Post by Zabz » Wed Oct 27, 2010 1:59 pm

belchingmatt wrote:I just don't get that 1 of every 10 people is paying so much tax that they can almost pay for everyone else.
Simple..

Taxes are worked out on % not ? so 25% of 100 000 is more ? than 25% of 20 000...



Ok that's a very simplified version not taking into account tierd tax rates, when you add that into the mix the top earners pay even more...



So yes the top earners are keeping the country going and not just in the UK!! OK those who actually pay taxes and not send money 'offshore'...





- I worked in payroll for a while!!



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belchingmatt
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The Tax System

Post by belchingmatt » Fri Oct 29, 2010 7:14 pm

Ok that simplifies it nicely. They are paying more in GBP but not as a %. Sounds fair to me.




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<div class='signature'> I'm not addicted to porn, I'm addicted to masturbation. Porn is just an enabler.



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There are plenty more fish in the sea, get your tackle out and see what bites.



Divers go deeper and stay down for longer.
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