Saturday, January 23, 2016

How tax system works in terms of beer spend

Here's a fun and great read from an article in Telegraph>

--Describes UK tax in terms of beer spend. ---

Goes like this: 10 men go out for a beer once a month.

The bill comes to £100.
They decide to split the bill in a similar way to tax bill.
First four men (poorest) pay 0
Fifth pays £1
Sixth pays £3
Seventh pays £7
Eight pays £12
Ninth pays £18
Tenth (richest) pays £59
The men are happy.
The pub owner decides to drop the price, their bill now comes to £80.
What do they do to split the £20 fairly?

The publican suggests:
First four men (poorest) pay 0
Fifth goes from £1 to 0
Sixth goes from £3 to £2
Seventh goes from £7 to £5
Eight goes from £12 to £9
Ninth goes from £18 to 14
Tenth (richest) goes from £59 to £49

But the men aren’t happy….
The sixth man points out that he only saved £1 out of the £20 but the tenth man got £10.
The seventh man agrees, asking why he only got £2 when tenth man got £10.
The first four men were also indignant saying “we didn’t get anything at all….The new system exploits the poor!”
So the nine men surrounded the tenth man and beat him up.

The next month the tenth man doesn’t show.
When it comes to paying the bill they found they didn’t have enough money between them to even pay for half the bill.

And that, the article concludes, is how our tax system works. The few who pay the highest taxes do tend to benefit from tax reliefs and reductions. Attack them for being rich and the risk is they may take their wealth elsewhere.

For those who understand, no explanation is needed. For those who do not understand, no explanation is possible.

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