Tuesday, 19 January 2010

Quote of the Decade

The mighty

Hannan
has struck blogging gold:
Suppose that every day, ten men went to the pub, and drank exactly £100 worth of ale among them. If they paid their bill the way we pay our taxes, the breakdown would be roughly as follows:
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.
The tenth man (the richest) would pay £59.
So, that’s what they decided to do.
The ten men drank contentedly together in the saloon bar until the landlord, meaning to be helpful, presented them with a dilemma.
“Gentlemen,” he said, “you’re my best customers. To show you how much I appreciate your trade, I’d like to give you a discount. From now on, I’ll knock £20 of the total bill for your drinks”. Drinks for the ten men would now cost just £80.
The group wanted to carry on splitting their bill in the way that we pay our taxes. So, obviously, the first four men, those least well off, would continue to enjoy free beer. What, though, of the other six? How could they divide the £20 discount in such a way that everyone got his fair share of the windfall?
They realised that £20 divided by six is £3.33. 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.
So, the bar owner suggested that it would be fair to reduce each man’s bill by a higher percentage the poorer he was, following the principle of the tax system they had been using. This is how the bill now looked.
The fifth man, like the first four, now paid nothing (100 per cent saving).
The sixth now paid £2 instead of £3 (33 per cent saving).
The seventh now paid £5 instead of £7 (28 per cent saving).
The eighth now paid £9 instead of £12 (25 per cent saving).
The ninth now paid £14 instead of £18 (22 per cent saving).
The tenth now paid £49 instead of £59 (16 per cent saving).
Each of the six was better off than before. And the first four continued to enjoy free booze. But, as they left the pub, the men began to compare their savings.
“I only got a pound out of the £20 saving,” declared the sixth man. He jabbed an accusing finger at the tenth man,”Why should he get £10?”
“Too right,” exclaimed the fifth man. “I only saved a pound 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 got two measly quid? The system is rigged in favour of the toffs!”
“Wait a minute,” yelled the first four men in unison, “we didn’t get anything at all. It’s always the worst off who get neglected by the politicians!”
The nine men dragged the tenth into the carpark and gave him a thorough kicking.
The next night the tenth man didn’t show up for drinks, so the nine sat down and had their beer without him.
But when the bill came, they found that their money didn’t even cover half of it.
Enough said.

12 comments:

Jack said...

and the moral of the story is what exactly - apart from it being a pseudo-clever exercise in GCSE maths...??

Jack said...

https://www.libdemvoice.org/?p=16524&utm_source=tweet&utm_medium=twitter&utm_campaign=a

Opinion: Why we should all be 40% taxpayers!

Anonymous said...

"Jack said...

and the moral of the story is what exactly - apart from it being a pseudo-clever exercise in GCSE maths...??"
If you need that explaining, you're obviously one of the first four, who paid nothing.

Houdini
said...

Socialism to a tee, only in Labours eyes the barman would be accused of making too much profit and a demand to pay the remainder of what they couldn't afford be levied on him.

Oldrightie
said...

An argument that is far beyong the comprehension of Labours' thick client state. As Jack so demonstrably shows.

Anonymous said...

It is a very old story, with a logically flawed message.

But if Labour sit there and believe the first part, and if the Tories sit there and believe the second part, it isn't surprising.

Proportion vs amount, how exciting.

OldSlaughter
said...

The moral of that story is to not go drinking with peasants.

Jack said...

You are mostly all missing the point - I doubt if the person would 'get a good kicking' because most people would recognise that they are all proportionately better off - the innate British sense of fair play would be what would 'kick in'. I think you show yourselves to be the kind of monetary focused (and stingy) Tories in your response to my first post - that I think you are despite the airbrushed image your smooth (faced and) talking leader is trying to project...

The more likely scenario is that the pub landlord says - "I am sorry guys but the bastards in the city run conglomerate that now runs the brewery have put up my costs so much (to pay for their fat cat bonuses) that I am going to have to charge you £120 next week." When they divvy that out - the richest guy will pay proportionately more.

But you won't get that though - will you?

Just like New Labour, you still blithely believe in the trickle down theory of capitalism - in a world where inequalities have become ever greater over the years since monetarism first legitimised greed.

Jack said...

and how does "So, the bar owner suggested that it would be fair to reduce each man’s bill by a higher percentage the poorer he was, following the principle of the tax system they had been using"

what principle?

Chris
said...

Well Jack - one moral of the story is that if you drive away the filthy rich you have to find the money from somewhere else. The Lib Dem Voice article you linked to has some interesting information and comments. Apparently the IFS have calculated that Brown will make much less than he predicts from the new 50% tax rate as those subject to it will relocate abroad or opt for more leisure time. You can't force them to stay or force them to work. Also "....many economists may consider that the UK has already reached the apex of the so called ‘laffer curve’ whereby further increasing the overall tax burden may actually diminish tax yields."
In today's global economy tax jurisdictions are competing for high earners. In Switzerland you can even negotiate!
Monetarism has nothing to do with greed. Inflation is a great generator of inequality and monetarism is a mechanism to control inflation. The idea that greed was 'legitimised' during the 1980s was to do with the lowering of personal tax rates. But (see above) higher tax rates lead to LESS tax revenue so they are not the answer. They may make the rich poorer but they do not make the poor richer. A policy which makes everyone poorer has little to recommend it. Unfortunately, just as the public finances were turning around in the mid 1990s New Labour got in. They have spent lots of money and achieved very little. Now they're bringing back high taxes. Next they will bring back inflation courtesy of 'quantative easing'. The poor are in for another clobbering. How would you sort it out?

DominicJ said...

I saved this on my desktop in June 2008, how are you people just hearing about it?

Anonymous said...

The gap keeps growing because the tax system is disproportionate. Those who can command higher salaries have to aim significantly higher as they are taxed significantly more.

We need a flat rate with the first £10 being untaxed.

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