Forum Archive Index - April 2002

["Eric Watson" <ericwatson01@hotmail.com>]

Dear Sharechaters,
Great to read all the different thoughts on the forum, keep them coming!!! I 
am not a frequent poster on the site but do diligently read the posts.I am 
really just a young amateur keen to learn.
Anyway I thought you would all love this tax story/article I was sent:


Subject: Good tax math...

The following article appeared in the February 23, 2002 issue of the
(Canada's) Lakeshore News - Salmon Arm, B.C.
It was written by Ron Adams, a local financial advisor who writes a
regular column in the paper. Ron is sometimes a little irreverent and
ruffles many conservative feathers in town but he is often
entertaining and usually gets straight to the heart of the issue.

"I was having lunch at PJ's with one of my favourite clients last
week and the conversation turned to the Campbell government's recent
round of tax cuts. "I'm opposed to those tax cuts," the retired
college instructor declared, "because they benefit the rich. The rich get 
much more money back than ordinary taxpayers like you and I and that's not 
fair."
"But the rich pay more in the first place," I argued, "so it stands
to reason that they'd get more money back." I could tell that my
friend was unimpressed by this meager argument.
Even college instructors are a prisoner of the myth that the "rich"
somehow get a free ride in Canada. Nothing could be further from the
truth.

Let's put tax cuts in terms everyone can understand.Suppose that everyday 10 
men go to PJ's for dinner,The bill for all ten comes to $100.If it was paid 
the way we pay our taxes, the first four men would
pay nothing; the fifth would pay $1; the sixth would pay $3; the
seventh $7; the eighth $12; the ninth $18. The tenth man (the richest) would 
pay $59.The 10 men ate dinner in the restaurant every day and seemed quite 
happy with the arrangement until 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 
meal by $20. Now dinner for the 10 only costs $80. The first four are 
unaffected. They still eat for free. Can you figure out how to divvy up the 
$20 savings among the remaining six so that everyone gets his fair share? 
The men realize that $20 divided by 6 is $3.33, but if they subtract that 
from everybody's share, then the fifth man and the sixth man would end up 
being paid to eat their meal.

The restaurant owner suggested that it would 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 paid nothing, the sixth 
pitched in $2, the seventh paid $5, the eighth paid $9, the ninth paid $12, 
leaving the tenth man with a bill of $52 instead of $59.

Outside the restaurant, the men began to compare their savings.
"I only got a dollar out the $20," declared the sixth man pointing
to the tenth, "and he got $7!" "Yeah, that's right," exclaimed the fifth 
man. I only saved a dollar,too. It's unfair that he got seven times more 
than me! "That's true," shouted the seventh man. "Why should he get $7 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 surrounded the 
tenth and beat him up. The next night he didn't show up for dinner, so the 
nine sat down and ate without him.But when it came time to pay the bill, 
they discovered something important.

They were $52 short!!!

And that, boys and girls and college instructors, is how Canada's
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 Auckland, Switzerland and the
Caribbean.










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