For my Libertarian friends

 

The maths error is in how the rebate is calculated, also the rebate isn't really a rebate (refund) but a tax (price) reduction so the 20 Rand wasn't paid back to them so they could apportion it between the 6 (tax) payers (since they don't pay 100 Rand that day), their bar-bill is now 80% of what it was the previous day so what they each pay was 80% of what they paid the previous day - each gets a 20% reduction. There are a few more (lets call them) mistakes in the example that I haven't the time or inclination to detail - if people think this is a fair and reasonable example of any tax system then nothing I say will change anything.

 

Nothing I have said has been, or could be construed to be, in defence of income tax. In this example someone has gone to great lengths to show income tax as bad by using a bad example that only shows that peoples understanding and perception of income tax is bad, but it hasn't really demonstrated why or how this tax is bad in comparison to other forms of taxation, or bad as a tax in general. Income tax is not good, it is not fair and it is poorly implemented, and illustrating all those bad things isn't difficult. What annoys me about this example is that it has fudged the numbers to make it look bad, when it was already bad in the first place.

 

The example doesn't say it is a rebate, but when they first try and divvy up the R20 between the six payers they are treating it like one, then when the bar owner suggests they "reduce each man's bill by a higher percentage the poorer he was" it is still treating it like a rebate. It's not and the example didn't actually do what the bar owner suggested anyway (I can explain why, but it's not important - just think about where those saving percentages came from).

 

So, why do I think this missing Rand is so relevant and why does this illustration annoy me so much? The key is the fifth man - he now pays no "tax" - his 1 Rand payment that now sits safely in his pocket is the missing Rand, so instead of getting a 100% saving as the creator of the illustration implies, he actually should have got a 0% saving - but that wouldn't do would it? - you couldn't have the lowest earning tax payer getting 0% saving while all the others got between 33% and 16% (actually 17% but hey) could you? - no, that would bust the whole analogy apart and everyone would be up-in-arms that the lowest earning tax payer really is being victimised rather than supposedly being victimised. See, I get annoyed because subterfuge and fudging (ie bad economics by way of bad maths) was used to show the system was bad - , when it was bad for the lowest payer and bad for the highest payer without the sleight of hand.

 

I'm also slightly "disappointed" that the example isn't particularly representative - 40% of the population does not pay zero income tax, even after benefits and handouts and 10% of the population does not pay 59% of the tax revenue - but that's neither here nor there - perhaps it is like that in South Africa.

Which means, if you had to take a percentage of your jar every month and give it to the government, you would be REALLY pissed off... 

But actually, they're already doing it. I bet that if you didn't have to pay any taxes, all that money would go straight to your liver...

 

I think they are equally hard to swallow

Seems like a stupid idea to purchase fire protection from a company which refuses to contract for road usage.