Beers and Tax (Let’s see if I get flamed again)

THE TAX SYSTEM EXPLAINED IN BEER

Suppose that every evening, 10 men go out for beer and the bill for
all ten comes to R100. 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 R1.
The sixth would pay R3.
The seventh would pay R7.
The eighth would pay R12.
The ninth would pay R18.
The tenth man (the richest) would pay R59.

So, that’s what they decided to do……. The 10 men drank in the bar
every evening and were quite happy with the arrangement, until one
day, the owner said,
“Since you are all such good customers, I’m going to reduce the cost
of your daily beer by R20″.

Drinks for the 10 men would now cost just R80.

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 R20 windfall so that everyone would get his fair share?
They realised that R20 divided by six is R3.33. 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.

Therefore, the fifth man, like the first four, now paid nothing.
The sixth now paid R2 instead of R3 (33% saving).
The seventh now paid R5 instead of R7 (28% saving).
The eighth now paid R9 instead of R12 (25% saving).
The ninth now paid R14 instead of R18 (22% saving).
The tenth now paid R49 instead of R59 (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 rand out of the R20 saving,” declared the sixth man. He
pointed to the tenth man,”but he got R10!”
“Yeah, that’s right,” exclaimed the fifth man. “I only saved a rand
too. It’s unfair – he got 10 times more benefit than me!”
“That’s true!” shouted the seventh man. “Why should he get R10 back,
when I got only R2? The wealthy always win!”
“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, labour unions and government
ministers, is how our tax system works. The people who 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.

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