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It all makes sense now

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    It all makes sense now

    Apologies if you have all seen this before - have only just come across it - brilliant explanation of our tax system:


    Let's put tax cuts in terms everyone can understand. Suppose that every day, ten men go out for dinner. 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 $7, the eighth $12, the ninth $18, and the tenth man — the richest — would pay $59.

    That's what they decided to do. The ten men ate dinner in the restaurant every day and seemed quite happy with the arrangement — until one day, the owner threw them a curve (in tax language a tax cut).

    "Since you are all such good customers," he said, "I'm going to reduce the cost of your daily meal by $20." So now dinner for the ten only cost $80.00.

    The group still wanted to pay their bill the way we pay our taxes. So the first four men were unaffected. They would still eat for free. But what about the other six — the paying customers? How could they divvy up the $20 windfall so that everyone would get his "fair share?"

    The six men 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 end up being PAID to eat their meal. So the restaurant 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 paid nothing, the sixth pitched in $2, the seventh paid $5, the eighth paid $9, the ninth paid $12, leaving the tenth man with a bill of $52 instead of his earlier $59. Each of the six was better off than before. And the first four continued to eat 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 who pointed to the tenth. "But he got $7!"

    "Yeah, that's right," exclaimed the fifth man, "I only saved a dollar, too . . . It's unfair that he got seven times more than me!".

    "That's true!" shouted the seventh man, "why should he get $7 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. The system exploits the poor!"

    The nine men surrounded the tenth and beat him up. The next night he didn't show up for dinner, so the nine sat down and ate without him. But when it came time to pay the bill, they discovered, a little late what was very important. They were FIFTY-TWO DOLLARS short of paying the bill! Imagine that!

    And that, boys and girls, journalists and college instructors, is how the 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 at the table anymore.

    Where would that leave the rest? Unfortunately, most taxing authorities anywhere cannot seem to grasp this rather straightforward logic!
    Last edited by John Galt; 16 June 2006, 10:31.

    #2
    why did the bill cost the same for Nine and Ten men?
    Your parents ruin the first half of your life and your kids ruin the second half

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      #3
      Originally posted by MrsGoof
      why did the bill cost the same for Nine and Ten men?
      I've seen this several times before, and that has never occurred to me.

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        #4
        It cost the same as the tax cut incurred costs to instigate.
        But I discovered nothing else but depraved, excessive superstition. Pliny the younger

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          #5
          Simple answer:

          Kill all the poor & then everyone would pay the same
          How fortunate for governments that the people they administer don't think

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            #6
            I see your point but I left the UK originally because the steak dinners that they started to serve and charge full price for ,turned out to be dog food.

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              #7
              I've recently studied the UK tax system and can confirm this is fairly accurate.

              Half of all households are net recipients of money from the state (i.e. 5 rather than 4 eat for free) and for 2006/2007 51.6% (rather than 59%) of all income tax comes from the richest 10%.

              The first stat. re. "half of all households" takes into account all taxes (includes indirect taxes) and all benefits including benefits in kind like health-care. The ONS is impressively careful in how they draw up these figures; for example they distinguish between tax credits paid to poorer people which they treat as a benefit and tax credits paid to richer people, which is treated as a tax reduction.

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                #8
                Originally posted by John Galt
                Apologies if you have all seen this before - have only just come across it - brilliant explanation of our tax system
                It's not a very well-considered explanation of our tax system if it's in dollars. Humph!

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                  #9
                  Originally posted by expat
                  It's not a very well-considered explanation of our tax system if it's in dollars. Humph!
                  Overtired

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                    #10
                    Originally posted by Troll
                    Simple answer:

                    Kill all the poor & then everyone would pay the same
                    No, we actually need more poor people so that prices have to stay low (sorta like how they have heaps of poor people in Singapore YET have rediculously low prices for everything).

                    Mailman

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