THE STUPIDITY OF GREED

Here is the real story to lighten the Budget discussion! You’ve heard the cry in the last couple of weeks from across Australia: “It’s just a tax cut for the rich!”, and it is accepted as fact. But what does that really mean?

The following explanation may help.

Suppose that every night, 10 men go out for dinner at La Porchetta’s.The bill for all 10 comes to $100.

They decided to pay their bill the way we pay our taxes, and it went like this:

* The first four men (the poorest) paid nothing.

* The fifth paid $1.

* The sixth $3.

* The seventh $7.

* The eighth $12.

* The ninth $18.

* The tenth man (the richest) paid $59.

All 10 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 meal by $20.”

So now dinner for the 10 only cost $80.

The group still wanted to pay their bill the way we pay our taxes.

The first four men were unaffected. They would 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 realised that $20 divided by six is $3.33. But if they subtracted that from everybody’s share, then the fifth and sixth men would each end up being paid to eat. The restaurateur suggested reducing each man’s bill by roughly the same percentage, thus:

* The fifth man paid nothing (like the first four) instead of $1 (100%saving).

* The sixth paid $2 instead of $3 (33% saving).

* The seventh paid $5 instead of $7 (28% saving).

* The eighth paid $9 instead of $12 (25% saving).

* The ninth paid $14 instead of $18 (22% saving).

* The tenth paid $49 instead of $59 (16% saving).

Each of the six was better off, and the first four continued to eat for free, as now did 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 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, boys and girls, journalists and college professors, 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.

With thanks to David R. Kamerschen, Professor of Economics, University of NSW.

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A short comment and a bit of friendly advice about one of your articles.
I have seen the taxation comment at http://jmm.org.au/articles/13052.htm a couple of times now and notice that the author is credited as David R. Kamerschen, Professor of Economics, University of NSW.
Having learnt to be sceptical of most things on the internet, I went to the UNSW website and searched there staff list for David R. Kamerschen. Surprise, surprise, he’s not there!
About 1 minute later I found a David R. Kamerschen at the University of Georgia. Take a quick look at http://www.arches.uga.edu/~davidk/. The first line is interesting reading.
Kind regards

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You need to know that the article “The Stupidity of greed.” is a hoax. This is hardly a good start to any mature discussion when the author is given some magnificent credentials to stop mere mortals questioning the logic of the argument! Furthermore even though the author exists in America, he never admits writing or supporting the article.
A brief search on the web appears to reveal the following materials: http://www.arches.uga.edu/~davidk/ there is a professor by that name who appears to be a rather learned fellow.
I think someone has used his name and said he’s at UNSW just to make it a local story. Also seems to have done the rounds for other occasions. Tax on the other hand is never meant to be fair – nothing in life really is And to make it even more of a giggle read the details as per this link which says its all a hoax anyway http://www.truthorfiction.com/rumors/t/taxcuts.htm
It may appear that the article has been put on the web site because it supports someones views on why the rich should always be rich!