8:29 AM, 3rd April 2013, About 12 years ago 82
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I have to confess to not being the author of this piece, I found it on Facebook, but I do think it is very worthy of sharing here.
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.
For those who understand, no explanation is needed.
For those who do not understand, no explanation is possible
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Mark Alexander - Founder of Property118
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Sign Up23:37 PM, 6th April 2013, About 12 years ago
@Gillian, I once heard something which has stuck in my mind "the best thing you can do for the poor is not to be poor".
Now I am going to get political, we need to dismantle the welfare state for Britain to become Great again.
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Sign Up23:43 PM, 6th April 2013, About 12 years ago
Mark - How do you feel about people who have inherited massive wealth, and have therefore had it easier than others, such as David Cameron, George Osborne, The Duke of Westminster and the royal family?
Mark Alexander - Founder of Property118
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Sign Up23:51 PM, 6th April 2013, About 12 years ago
@Tom, the way I feel about these people is that in in terms of wealth they are privileged. I don't agree that the names of the people that you have cited have had an easy life though. I certainly would not want to trade places with any of them. Our Royal family is a National Treasure and it has been proven many times that their existence improves the UK economy. The Queen, God bless her, was born into a life of slavery if you think about it. Can you think of anybody who has worked for their country to a greater extent than our Queen?
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Sign Up23:55 PM, 6th April 2013, About 12 years ago
Mark - I completely understand your sending your daughter to a private school, but most people do not have that option. They have to suffer any bullying that comes their way and would never get classes with one teacher to ten pupils. As a result, your daughter will have a massive advantage in life over children. She has a far higher chance of earning more money than other people in a career that she enjoys and finds satisfying. Is it fair then, that she gets far more disposable income as an adult than someone who has not had those advantages and earns less in, probably a less satisfying and possibly physically harder job?
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Sign Up23:56 PM, 6th April 2013, About 12 years ago
Has anyone looked at my link to the research by The Equality Trust? Any comments?
Mark Alexander - Founder of Property118
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Sign Up0:00 AM, 7th April 2013, About 12 years ago
Tom - have you read my story in my comments above? What parent doesn't want the best for their children? I gave my daughter the best start in life that I could. What she does with that is up to her.
Feel free to answer some of the questions I have asked of others in my previous comments.
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Sign Up1:01 AM, 7th April 2013, About 12 years ago
@Mark - Yes I did read your comments but I don't see how they answer my question.
Mark Alexander - Founder of Property118
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Sign Up11:10 AM, 7th April 2013, About 12 years ago
@Tom - sorry you feel that I didn't answer your question, I will try again. I was taught by my parents to envy wealth and privilege but not to be jealous of it. I was taught to be motivated by the fact that some people have more in life than others. I was taught that anything is possible and that I should go for it. Therefore, no I do not feel that it is unfair that I managed to do all of these things and give my daughter a head start in life.
What I do think is unfair is the attitudes that some parents instil in their children, i.e. there are no jobs and no opportunities. Of course there are both and sometimes people have to start at the bottom and work their way up, even if that means earning just £2 a week more than they would receive in the form of benefits to begin with.
Have I answered your question now?
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Sign Up16:42 PM, 7th April 2013, About 12 years ago
@Mark - I wasn't asking if it is unfair on you, I was asking if it is fair on the other children. They do not have the advantages you have been able to give your daughter. Let's take the example of a child who gets bullied at school and/or does not get sufficient attention from her teacher in a class of 30 or more. This child has much less chance of being able to choose a satisfying career over which she has control and provides her with a high income. This little girl did not choose to get bullied or be in a class of 30, so why should she have to have less disposable income than your daughter, in addition to having a less satisfying job through no fault of her own?
Mark Alexander - Founder of Property118
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Sign Up17:22 PM, 7th April 2013, About 12 years ago
Tom, of course it is fair. I worked hard to make sure that my daughter was in a better position than I was. If that incentive had not have existed, nor the incentive for me to enjoy the finer things in life, I might not have tried so hard and sacrificed so many other things such as spending more time with my family instead of working. Life is all about choices and I am just a hard working man who plays by rules set by other people, I'm not Einstein.