Some people will find a way to complain…

This is a very good parable about how individual tax cuts will always have some people complaining…

Every day, ten men go out for beer and the bill comes to $100. They pay their bill the way progressive taxes work. The poorest four pay nothing. The fifth pays $1. The sixth $3. The seventh $7. The eighth $12. The ninth $18. The tenth man (the richest) pays $59.

The ten men are content, until the bar owner says he wants to reward their custom by reducing their bill by $20.

How will they divide the $20 windfall so everyone gets a fair share?

The owner suggests reducing each man’s bill by a higher percentage the poorer he is, to follow the principle of the tax system.

So the fifth man, like the first four, now pays nothing (100% saving). The sixth pays $2 (33% saving). The seventh $5 (28% saving). The eighth $9 (25% saving). The ninth $14 (22% saving). And the tenth now pays $49 (16% saving).

Each of the six is better off and the first four still get free beer. But outside the bar they compare their savings.

“I only got a dollar,” says the sixth man. He points at the tenth man, “but he got $10!”

The others agree. “Why should he get $10 back, when I got only $2?” yells the seventh man.

“We didn’t get anything at all,” yell the first four. “This new tax system exploits the poor!”

So they beat up the tenth man.

The next night he doesn’t show up at the bar so the other nine drink without him. But when it comes time to pay the bill, they discover they don’t have enough money between them to pay even half.

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About Ken Mansell

As a stay at home Dad most of the week this is my way of pretending I am still the tax counsel of ASX and SEC listed companies, working at big 4 firms, working at the Federal Treasury, on the Henry Review and at Parliament House for the previous government.
This entry was posted in Funny Stuff, Tax Policy. Bookmark the permalink.

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