Hmm, average income in the top decile is around £90,000 (no point in being more accurate than that throughout). Cut out everything they get from the State and everything they pay to the State and you get £65,000 a year. There are some 2.5 million households in that top decile.
So, total income of “the rich” is £225 billion a year, of which they pay £63 billion or so a year to the State (nett of course, taxes out and benefits in) leaving them with about £163 billion a year to wave in the faces of the downtrodden poor.
How much does the whole system cost a year? Around £660 billion isn’t it?
So, we could take all the money off the rich, every penny (and of course we could only do this once as the next year they’d all bugger off) and we’d be, umm, lessee….£660 minus about 60 they already pay minus another 160 ish that we let them keep so far….what, £440 billion short of what government costs us?
And that’s why we tax the poor, because the rich simply don’t have enough money to pay for the State we already have.
If you want to have a State that the poor don’t have to pay for, but the rich carry all the burden, then you need a smaller State than the one we have.
Simples!
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Got this is an e-mail the other day. Bar stool economics.
Suppose that every day, 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.
The tenth man (the richest) would pay $59.
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 $20. Drinks for the ten 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 the fifth man and the sixth man would each end up being paid to drink his beer. So, the bar owner suggested 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 $2 instead of $3 (33%savings).
The seventh now pay $5 instead of $7 (28%savings).
The eighth now paid $9 instead of $12 (25% savings).
The ninth now paid $14 instead of $18 (22% savings).
The tenth now paid $49 instead of $59 (16% savings).
Each of the six was better off than before. And the first four continued to drink for free. But once outside the bar, 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!'
'Yeah, that's right,' exclaimed the fifth man. 'I only saved a dollar,too. It's unfair that he got ten times more than I!'
'That's true!!' shouted the seventh man.
'Why should he get $10 back when I got only two? 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!
(The 10th man was originally paying $59 of $100, then $49 of $80)
And that, boys and girls, 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.
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