Legalized Tax Evasion
I AM SHOCKED that an industry publication that I have respected would include such drivel as this. Trevor Thomas might as well have asked Nancy Pelosi to write that article.
Jeff Markovic
Pillar Insurance
Editor's Note: When we ran Jack Bobo's column, which was as conservative as Trevor's is liberal, we got the same amount of unhappy letters, so regardless of politics, we seem to be annoying the same number of people. Opinions aside, it's worth noting that Trevor's articles are genuinely researched and thought out, and this appears to be what generates his opposition. Were he merely talking out of his ear, he would be easier to disregard. And yet, people do not.
Please print this as a response to all the ignorant (as in, exhibiting lack of education or knowledge) rantings of Trevor Thomas. I assumed he was a young kid based on his opinions. I was totally surprised when I saw his picture on the web site.
What follows is a viral internet note, but the numbers are reasonably consistent with what I've read in the WSJ and other publications. It is attributed to David R. Kamerschen, Ph.D., a professor of economics with the University of Georgia, but another internet note indicated that the attribution is incorrect and the original author is unknown.
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 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, like the first four, now paid nothing (100% savings). The sixth now paid $2 instead of $3 (33% savings). The seventh now paid $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).
