Radschool Association Magazine - Vol 20

Page 5


Out in the shed with Ted.

Ted McEvoy

            Budget Tax Cuts explained

Here is the REAL story to lighten those that have a jaundiced view of the last Budget.You've all heard the belly aching which arose after the last budget - "It's just a tax cut for the rich!" - this was repeated so many times by the (then) opposition and the press that it became accepted as fact - but was it??  The following explanation may help.

Suppose that every night, ten men go out for dinner at La Restoranté. The bill for all ten comes to $100. They decide to pay their bill the way we pay our taxes, and it goes like this:


* The first four men (the poorest) pay nothing.      * The fifth pays $1.     * The sixth $3.     * The seventh $7.    

* The eighth $12.     * The ninth $18.     * The tenth man (the richest) pays $59.


All 10 are quite happy with the arrangement, until one day, the owner says: "Since you are all such good customers, I'm going to reduce the cost of your daily meal by $20." So now their dinner for ten only costs $80. The group still decides to pay their bill the way we pay our taxes. The first four men are unaffected. They will still eat for free. But how should the other six, the paying customers, divvy up the $20 windfall so that everyone would get his "fair share"? They realize that $20 divided by six is $3.33. But if they subtract that from everybody's share, then the fifth and sixth men would each end up being paid to eat.


The restaurateur suggests reducing each man's bill by roughly the same percentage thus:


* The fifth man pays nothing (like the first four) instead of $1.    * The sixth pays $2 instead of $3.    

* The seventh pays $5 instead of $7.     * The eighth pays $9 instead of $12.

* The ninth pays $14 instead of $18.     * The tenth pays $49 instead of $59.


Each of the six are better off, and the first four continue to eat for free, as now does the fifth - but outside the restaurant, the men began to compare their savings. "I only got a dollar out of the $20," declared the sixth man. He pointed to the tenth man "but he got $10!" "That's right," exclaimed the fifth man. "I only saved a dollar too. It's unfair that he got ten times more than me!" "That's true!" shouted the seventh man. "Why should he get $10 back when I got only $2? 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 then surrounded the tenth and beat him up


The next night the tenth man didn't show up for dinner. The nine sat down and ate without him, but when they came to pay the bill, they discovered that they didn't have enough money between all of them to meet even half of the bill!


That 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 at the table anymore.There are lots of good restaurants in Monaco and the Caribbean.


The above was from a speech given by: David R. Kamerschen, Professor of Economics, University of NSW.



Merry Christmas everybody - CLICK HERE (speakers up)

While in Canada a few years ago, I took, what I consider, an excellent photo of the CNN tower. Click here to see it.

Points to Ponder


1. My wife says I never listen to her. At least I think that's what she said.


2. When I was young we used to go "skinny dipping", now I just "chunky dunking".


3. The early bird still has to eat worms.


4. The worst thing about accidents in the kitchen is eating them.


Ain't living in the US of A great???

"If the wings are traveling faster than the fuselage, it's probably a helicopter -- and therefore, unsafe." 

Old pilot saying  "The only time you have too much fuel is when you're on fire"

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