AardvarkBusiness.net - Business Search Engine AardvarkBusiness.net - Business Search Engine



 FAQFAQ   SearchSearch   MemberlistMemberlist   UsergroupsUsergroups   RegisterRegister   ProfileProfile   Log in to check your private messagesLog in to check your private messages   Log inLog in 

     

The tax system explained in beer

 
 
Post new topic   Reply to topic    AardvarkBusiness.net Forum Index -> Accountancy & Finance Forum
View previous topic :: View next topic  
Author Message
paul
President
President


Joined: 15 Oct 2002
Posts: 8314
Location: UK
11706 ants

PostPosted: Sat Apr 14, 2012 4:35 pm    Post subject: The tax system explained in beer Reply with quote

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.
_________________
UK Hotels - UK Selfcatering
Luxury Travel - Lake District Apartment
Back to top
View user's profile Send private message Visit poster's website
Kay
President
President


Joined: 07 Jan 2009
Posts: 3079
Location: Mostly SE Asia
4173 ants

PostPosted: Sat Apr 14, 2012 7:02 pm    Post subject: Reply with quote

Great! Given that I'm in the expat niche, this sounds like good news for me. Twisted Evil
_________________
http://britishexpat.com
Back to top
View user's profile Send private message Visit poster's website
Azolla
Secretary
Secretary


Joined: 21 Apr 2012
Posts: 13

16 ants

PostPosted: Tue May 29, 2012 3:46 pm    Post subject: Reply with quote

I like the story. It's a fair point. Some people don't seem to consider where the money actually comes from!
Back to top
View user's profile Send private message
Display posts from previous:   
Post new topic   Reply to topic    AardvarkBusiness.net Forum Index -> Accountancy & Finance Forum All times are GMT + 1 Hour
Page 1 of 1

 
Google
 
Business ForumSport ForumTravel Forum


Powered by php B B © 2001, 2002 php B B Group

AardvarkBusiness.net Business Search Engine & Directory