Saturday, 13 November 2010

A Guide To Taxation And Economics

As I have probably mentioned before I am no financial expert, far from it, but here's what I thought was an excellent explanation of how people in the higher tax bracket will benefit the most from having a tax reduction ... and ultimately, I guess, so will we.

But what do you think? Or is it all totally irrelevant now, due to the fact that our taxation system is gradually being taken over by the EU anyway?

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!"

"Yeah, that's right!" exclaimed the fifth man. "I only saved a £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. When it came to paying 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.

David R. Kamerschen, Ph.D. Professor of Economics.
For those who understand, no explanation is needed
For those who do not understand, no explanation is possible.



Joe Public said...

"The next week the tenth man didn't show up for drinks...."

Because he'd bought the bar; earned £80 revenue with 20% profit so was a £16 per week better off, which after tax at 50% meant he was up £8 rather than down £49.

He had his income sent to Spain where he now lived, and bought the local Sangria.

Captain Haddock said...

I think its inherently right that those earning the most income should pay more in Tax than those earning little income (pensioners etc) ..

Government has a duty & responsibility to be cautious as to how they spend money which isn't "theirs" ..

Those on Benefits should also pay Tax on them .. I'm not sure whether that actually happens, as I've never received a "Benefit" in my life ..

When I retired, I treated myself to a whole year off .. figuring that as I'd worked since I was 16, I deserved it ..

At the end of that 12 months, I got bored & so toddled along to the local Job Center .. (foolishly thinking that they would help me find work) .. After filling in numerous forms & answering some very personal questions .. I was informed .. "There's nothing here for you, you have a pension & you're not entitled to Job Seekers Allowance either, because of that pension" ...

I've had a couple of jobs since then (found through my own efforts) .. but have obviously paid Income Tax, plus Tax on my pension ..

I'm not working at the moment because the financial rewards wouldn't make up for what I'd be shelling out on Tax .. but neither am I a burden on the State .. as I get nothing from it ..

I just about get by on my service pension .. but fuck me .. am I bored ... *DONT_KNOW*

Span Ows said...

<span>Nice one, especially the tag line: </span>
"For those who understand, no explanation is needed For those who do not understand, no explanation is possible."
Will reblog this and link.

Oldrightie said...

Sadly the "rich" are now the ruling elite and they get all our money!

woodsy42 said...

I thought that was a very clever way to look at the 'unfairness' of tax cuts, but sadly doubt many people will actully understand.

LOL said...

Plus fat poofs.

NFN said...

"<span>neither am I a burden on the State" "</span><span>my service pension" dichotomy much? Of course your service pension is a burden on the state. You paid your contributions over the years and the government took that money and squandered it. YOUR MONEY IS GONE. Not your fault of course but now the state is having to pay your pension out of money it doesn't have, out of taxes. I'm afraid you're just as much a parasite on the rest of us  as that 16 year single Mom.

Caratacus said...

That was brave...

GrumpyOldTwat said...

"<span>you're just as much a parasite on the rest of us  as that 16 year single Mom" < If I were in a good mood I'd say you were being deliberately provocative. However, most of the time I would put you down as being a total cunt, talking total bollocks.</span>

Caratacus said...

<span>Can't leave it alone - something was nagging at the back of my mind about your choice of words.  
Got it.  
Look up 'parasitism' in the dictionary, then 'symbiosis'. Wealth of difference there; and Britain should count itself as having made the better of the symbiotic bargain established with the Captain and men (+ women) like him.</span>

Caratacus said...

What I meant was while your observation may have some merit, the way you put it doesn't. Like mpangloss I agree that you can say what you like, when you like and how you like. Just don't be surprised if rose petals are not strewn in your path as you scatter your words hither and yon.

Unlike Pangloss, I'm not sure that I would defend to the death your right to say it!

Like much of what I write here, it's bloody superfluous anyway. The Captain will make his own pertinent - and pungent - response in his own way without any unwelcome help from me.

Katabasis said...

That tag line is possibly the most important part of the whole piece. People either understand the issue (and its attendant seriousness) when explained to them like this, or they *choose* some kind of masturbatory in-denial fantasy where money appears out of nowhere and the people shouting about debt and deficits are purely "ideologically" motivated.

barnehurst bob said...

If the rich man was a member of the shadow cabinet, and god knows most of them are rich, would the kicking be justified? Would their conscience make the shadow cabinet man return to the pub every night to subsidise the genuinely poor? Would the men from 5 to 9 who have been impoverished by the actions of the tenth man not only start the kicking but assume the moral high ground throughout the evening? Would the men from 5 to 9 drive the 10th man to the pub every night, drink with him, beat him senseless and scream in his face 'you socialist c**t! You've made us the working poor and you live like a Lord on our graft! Have another kicking you c**t!'

Just asking. 

Joe Public said...

".....talking total bollocks.' Or, 14% Bush Cricket..........

Bring On The Revolution said...

Maybe if we all refused to pay any tax at all until such time as Muzzie immigrant scrounger cunts that preach "Death to the Infidel" are got fucking rid of, we told our own home grown work shy layabouts to get off their fucking fat lazy arses and worked for a fucking change, got Britain out of the evil empire of the EUSSR that soaks up huge sums of OUR money (No taxation without representation) and get all the expense-claiming thieving MP's in the dock at the Old Bailey, and also got rid of all the Gaurdianista non-job parasitic "Five-a-fucking-day" and "Diversity-fucking-awareness" co-fucking-ordinator cunts.
Then maybe, just maybe the utterly useless traitor cunts of the political estblishment might sit up and take notice, but don't hold your breath. This country is "run" by a bunch of complete, total and utter CUNTS!!!!!

Captain Haddock said...

There's "Bravery" (upon which, judging by his previous outbursts .. our little Norfolk based, allegedly former piss-head appears to put little value) ..

And there's "Stupidity" .. to which he appears to subscribe heavily ..

I'm not going to waste my time nor typing fingers in calling the bloke a Cunt .. Because in all truth (unlike him) .. Cunts are useful & fulfil a vital function ...

The more I read this persons utterings .. the more convinced I become that either he's still a piss-head .. or there's lots of screws loose ..

You know .. cause & effect ... More to be pitied than laughed at ..

NFN said...

<span>Am I being a cunt? Yes very definately. I get just a little pissed when I hear people like dear old Capt. Hadcock talking as if we/society/the tax payer owed them something. Its very simple math people: The government have shafted us all, they have taken our money and gambled with it or invested in Duck Houses. Not just what we have 'paid in' but the interest on it too.  
Do you not see that? What bit of 'they have blown all your contributions on buying more toys for the shirtlifting soldier boys' do you not understand?  
If the Captain doesn't want to be a burden on us all then he needs to retire to the bedroom with that service revolver.  
The 16 year old single mom actually needs to spread her legs more often and drop as many brats as she can. The 'benefits' she receives are her wage for contributing to society cos its her kids who will be paying MY pension.</span>

Muuurty's Ghuuurst said...

B.O.T.R. Fine sentiments indeed, however, I wouldn't hold your breath.

I'm astonished that when one reads such sentiments as yours (and numerous others) on blogs all over the gaff that there appears to be no-one in any position to do anything 'proper' (for want of a better / word description) to sort out the true ills of this country.

Call me Dave is a fucking wet lettuce. Just what is wrong with the UK ??? Will we ever get someone with the balls to do what 'normal people' can see needs to be done to sort the mess???

Bring On The Revolution said...

Talking of Muzzie immigrant scrounger cunts, what the fucking fuck is this fucking shit hole of a fucking "Cuntry" becoming??

Why the fuck can't we just shoot these muzzie cunts and be done with it? I nominate Hammersmith and Fulham Council as a cunt and all!!

Caratacus said...

Loved it BOTR! Shouldn't that be "Di-fucking-versity-fucking-awareness"?

I am a pedantic old cunt...

Bring On The Revolution said...

<span>"Call me Dave is a fucking wet lettuce" That name just about sums up what Cowardly, capitulating to EUSSR Cameroon really fucking is! A fucking wet lettuce being devoured by slugs indeed!!</span>

Bring On The Revolution said...

Fucking Neo Stalinist cunts of the EUSSR can go fuck themselves and fucking die and all!

Caratacus said...

<p><span>I'll try and make this as clear as I can:-  </span><span>
</span><span>WE/SOCIETY/THE TAXPAYER </span><span>DO</span><span> FUCKING OWE THEM SOMETHING</span><span>  
</span><span>quite a fucking lot as it happens....  
and they shouldn't have to fucking ask.  
(Will that overload anything Gotty?)</span><span></span></p>

Dave said...

You know as well as I do that there is every chance her sprogs will contribute nothing to your pension and there is every chance they will be spongers like Ma. In the real world.

Captain Haddock said...

Excessive consumption of alcohol = brain damage ..

I rest my case ..

NFN said...

<span><span>"WE/SOCIETY/THE TAXPAYER </span><span>DO</span><span> FUCKING OWE THEM SOMETHING</span><span>    
</span><span>quite a fucking lot as it happens...."</span></span>

Didn't they get paid for doing their job? Did I miss Crown Forces becoming a registered charity? They did their job and got paid, society owes them nothing. .....except perhaps contempt for the atrocities committed in all our names.

Captain Haddock said...

Thanks again "C" .. but I don't actually want anything from anyone .. And I most certainly don't believe that I'm "owed" anything ..

What I said was that paying tax on both my pension & on any additional earnings quite honestly doesn't make economic sense .. As for my pension .. I view it as having paid my "dues" upfront ..

I could have done with those contributions when my kids were growing up & my daughter was going through shoes like no-one's business .. and my lad was putting the knee through his trousers every other week playing football .. and, yes .. I'm aware that I'm far from being alone in that particular boat ..

What I would like to see is the rationalisation of taxation so that there is an incentive for people like me to return to work ..

Yet again NFN (which I'm convinced stands for No Fucking Nous) harks back to anal sex .. Is the man besotted by the idea ? .. Does he suffer from a fetish ? .. Is he actually crying out for help ? 

Caratacus said...

Understood Captain. Unfortunate choice of words on my part. Had the hump, no excuse.

My father was RM, and, as you know, I was privileged to work alongside bootnecks in one capacity and another years ago. Having worked with and trained a number of servicemen over the years, it was always a pleasure to get back to Devon and Stonehouse. The Royals are the most profane, raucous, loyal, flatulant, disgusting, courageous, comradely and hysterically funny bunch of lads it has been my privilege to work with.

Is he crying out for help? Dunno. Perhaps if we all sing together, "The sexual life of a camel......"

Captain Haddock said...

Many apols if I came across as being critical of your comments "C" .. far from it .. I know your history & your views and appreciate both ..

I was trying to point out to the resident Village Idiot that of course I got paid for doing my job .. one for which I volunteered & was proud to do .. so therefore, don't believe that I'm "owed" ..

You know, the more of his anti-military & anal sex based ramblings I read .. the more I begin to wonder whether he might have once tried to join the military .. but was rejected when the MO saw the state of his tattered & torn arsehole .. or whether he actually got into the military but was kicked out because of his "leanings" ..

Which would all go a long way to explain his sad (and I use that word in its sense of being pathetic) attitude ..

NFN said...

"<span> The Royals are the most profane, raucous, loyal, <span>flatulant</span>, disgusting, courageous, comradely and hysterically funny bunch of lads it has been my privilege to work with.  "</span>

Now who is anally fixated? Have you forgotten the 'lets get bollock naked vid'? But actually your description fits most Special Forces members (yeah alright, I know technically the Royal Marines aren't Special Forces but near enough IMNSHO).

Caratacus said...

As they do say in Injun Country (t'other zide ov the Tamar), "Now - this is whut 'appens when cuzzens marry"...

NFN said...

"<span>As they do say in Injun Country (t'other zide ov the Tamar), "Now - this is whut 'appens when cuzzens marry"..."</span>

This is Norfolk, If you're going to sleep with your sister you damn well marry her an do it legal...loik

Caratacus said...

That's me fucked then! :-D

NFN said...

Please stop defaming Islamic vaginas. Trust me on this one, there is nothing wrong with arab cunts. Not met one yet I didn't like! :P

Bring On The Revolution said...

What shaft them with a red hot poker???