(Copied, Recycled.exe) Suppose that every day, ten drunks (munajijua) go out for beer and the bill for all ten comes to KES 1000. 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 10 bob. The sixth would pay 30 bob. The seventh would pay 70 bob. The eighth would pay 120 bob. The ninth would pay 180 bob. The tenth man (the richest) would pay 590. So, that’s what they decided to do. The ten men drank in the bar every day and seemed quite happy with the arrangement, until one day, the owner threw them a curve. ‘Since you are all such good customers, he said, I’m going to reduce the cost of your daily beer by 200 bob. Drinks for the ten now cost just 800 bob. 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 200 bob windfall so that everyone would get his ‘fair share?’ They realized that 200/- divided by six is 33.33. But if they subtracted that from everybody’s share, then the fifth man and the sixth man would each end up being paid to drink his beer. So, the bar 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, like the first four, now paid nothing (100% savings). The sixth now paid 20/- instead of 30/- (33%savings). The seventh now pay 50/- instead of 70/- (28% savings). The eighth now paid 90/- instead of 120/- (25% savings). The ninth now paid 140/- instead of 180/- (22% savings). The tenth now paid 490/- instead of 590/- (16% savings). Each of the six was better off than before. And the first four continued to drink for free. But once outside the restaurant, the men began to compare their savings. ‘I only got 10/- out of savings, ‘declared the sixth man. He pointed to the tenth man, ‘but he got 100/-!’ ‘Yeah, that’s right,’ exclaimed the fifth man. ‘I only saved 30/-, too. It’s unfair that he got three times more than I!’ ‘That’s true!!’ shouted the seventh man. ‘Why should he get 100 bob back when I got only twenty? 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 the tenth man didn’t show up for drinks, so the nine sat down and had 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 for even half of the bill! And that, boys and girls,and drunks, is how our 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 anymore. In fact, they might start drinking overseas where the atmosphere is somewhat friendlier....
Posted on: Wed, 26 Jun 2013 07:56:06 +0000
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