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Daniel Neville
Works at Idea Bounty
Attended University of Cape Town
Lived in Harare, Zimbabwe
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Daniel Neville

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Awesome -> The tax System Explained In Beer


... and after you've read this, you may want to go out and have a beer yourself.

Suppose that every evening, ten men go out for beer and the bill for all ten comes to R100. 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 R1. The sixth would pay R3. The seventh would pay R7. The eighth would pay R12. The ninth would pay R18. The tenth man (the richest) would pay R59. So, that's what they decided to do...

The ten men drank in the bar every evening and were quite happy with the arrangement, until one day, the owner said, "Since you are all such good customers, I'm going to reduce the cost of your daily beer by R20". Drinks for the ten men would now cost just R80.

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 R20 windfall so that everyone would get his fair share? They realised that R20 divided by six is R3.33. 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 a higher percentage the poorer he was, to follow the principle of the tax system they had been using, and he proceeded to work out the amounts he suggested that each should now pay. Therefore, the fifth man, like the first four, now paid nothing. The sixth now paid R2 instead of R3 (33% saving). The seventh now paid R5 instead of R7 (28% saving). The eighth now paid R9 instead of R12 (25% saving). The ninth now paid R14 instead of R18 (22% saving). The tenth now paid R49 instead of R59 (16% saving).

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 rand out of the R20 saving," declared the sixth man. He pointed to the tenth man, "but he got R10!"

"Yeah, that's right," exclaimed the fifth man. "I only saved a rand too. It's unfair - he got 10 times more benefit than me!"

"That's true!" shouted the seventh man. "Why should he get R10 back, when I got only R2? The wealthy always win!"

"Wait a minute," yelled the first four men in unison, "we didn't get anything at all. This new tax 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 their 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, journalists, labour unions and government ministers, is how our tax system works. The people who pay the highest taxes will naturally 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.

(For those who understand, no explanation is needed. For those who do not understand, no explanation is possible.)
[Original source unknown]

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Actually not strictly correct since the top marginal tax rate in SA is 40% so no one should pay for more than 40% of the bill, but the principle remains ...
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Allison Mlitwa's profile photoAmod Munga's profile photo
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i loved your explanation. pretty cool
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Daniel Neville

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London Riots - Man hits the nail on the head when it comes to the cause of the riots - London Riots - won't hear this on the news!
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Steven Baulk's profile photoAnna Ptasińska's profile photoDaniel Neville's profile photo
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the more I think about this the more I am on the fence - seems to me blame needs to be laid at the feet of both parties - The rioters for rioting (all the reasons above) and the government for refusing to understand the climate and culture they have built, writing this all off a pure criminality. What do you think of this? http://nathanieltapley.com/2011/08/10/an-open-letter-to-david-camerons-parents/
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Daniel Neville

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Sublime with Rome & the music video for their first single 'Panic' - http://bit.ly/n70vCG - Rome might not be Brad but I can still feel the vibe. Really dig Eric's bass lines, it might be 2011 but those grooves he pumps out are so 1994...
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Have him in circles
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Daniel Neville

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Spanking new brief just live on Idea Bounty - $3000 for a new drink made with Mainstay. Awesome brief me thinks! - http://www.ideabounty.com/
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Sean Hidden's profile photoSteven Baulk's profile photoBrett Lee Allen-White's profile photoDaniel Neville's profile photo
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Mainstay and urine - i call it "Jaundice"
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Rocking out with the debut album from 'Sublime with Rome' - Brad might not be there any more but this still kicks ass - Sublime With Rome: Panic [OFFICIAL VIDEO]
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Have him in circles
565 people
Caitlin Leigh's profile photo
Jeanne Elize Marshall's profile photo
James Long's profile photo
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Occupation
Head up www.ideabounty.com
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  • Idea Bounty
    MD, 2008 - present
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Map of the places this user has livedMap of the places this user has livedMap of the places this user has lived
Previously
Harare, Zimbabwe - Cape Town South, Africa - London, United Kingdom
Story
Tagline
digital fanatic, information monger and proud beard owner
Introduction
I am a digital media fanatic with keen interests that reach across a variety of topics. My great loves however are technology, information, innovation, ideas, music, film, literature and a sprinkling of politics.  By day I run and operate Idea Bounty - a crowdsourcing platform focusing on marketing and communications challenges. 
Bragging rights
I have a beard... that is all
Education
  • University of Cape Town
    BA Undergrad, 2005 - 2007
  • VEGA Brand Communications School
    Honours in Brand Communications, 2008 - 2008
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Male