Divvying it up
A LESSON in tax structuring and tax rates comes this way. It seems to have a bearing on current debates in the political sphere. It's expressed in terms of beer, bringing it within the ken of the ordinary citizen.
Suppose that every day10 fellows go out for beers and the bill for all 10 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 10th man (the richest) would pay R59.
So, that's what they decide to do.
The 10 fellows drink in the bar every day and seem quite happy with the arrangement until one day the owner throws them a curve ball.
"Since you are all such good customers," he says, "I'm going to reduce the cost of your daily beer by R20."
Drinks for the 10 now cost just R80. The group still want to pay their bill the way we pay our taxes.
So the first four men are unaffected. They will still drink for free.
But what about the other six? How can they divide the R20 windfall so that everyone gets his fair share?
They realise that R20 divided by six is R3.33. But if they subtract that from everybody's share, then the fifth man and the sixth will each end up being paid to drink his beer.
So, the bar owner suggests it will be fair to reduce each man's bill by a higher percentage the poorer he is, to follow the principle of the tax system they have been using, and he proceeds to work out the amounts that each should now pay.
And so the fifth man, like the first four, now pays nothing (100% saving). The sixth now pays R2 instead of R3 (33% saving).The seventh now pays R5 instead of R7 (28% saving). The eighth now pays R9 instead of R12 (25% saving). The ninth now pays R14 instead of R18 (22% saving). The 10th now pays R49 instead of R59 (16% saving).
Each of the six is better off than before. And the first four continue to drink for free. Plus, now, the fifth.
But, outside the bar, they begin comparing their savings.
"I only got R1 out of the R20 saving," declares the sixth man. He points to the tenth. "But he got R10!"
"Yeah, that's right," exclaimed the fifth man. "I only saved R1 too. It's unfair that he received 10 times more benefit than me!
""That's true!" shouts the seventh man. "Why should he get R10 back, when I got only R2? "The wealthy get all the breaks!"
"Wait a minute!" yell the first four in unison, "We didn't get anything at all. This new tax system exploits the poor!"
The nine men surround the tenth and beat him up. Next night he doesn't show up for drinks, so the nine sit down and have their beers without him.
But when it comes time to pay the bill, they discover something important. They don't have enough money between all of them for even half the bill.
And that is how our tax system works. The people who already pay the highest taxes 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.
For those who understand, no explanation is needed. For those who do not understand, no explanation is possible.
(This was sent in by somebody claiming to be from the National Treasury. But I think he might be having us on.)
Colours
OVERHEARD in the Street Shelter for the Over-Forties: "The difference between pink and purple? It's the woman's grip on your throat."
Bumper sticker
"DON'T be condescending (That means talking down to people)"
Tailpiece
"ENTER PASSWORD"
"snowflake"
"RE-ENTER PASSWORD"
"snowflake"
"ERROR – PASSWORDS MUST BE IDENTICAL"
Last word
All truth passes through three stages. First, it is ridiculed. Second, it is violently opposed. Third, it is accepted as being self-evident.
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