Budgeting for the Beer Fund

Ahead of the budget on 20 March 2013 I thought I would update a story that does the rounds every so often .

Hopefully it will get you thinking about the rates of tax and the difficult decisions that need to be made. I would credit the person who originally came up with this story but, as I’m not sure who that is, I will raise a glass instead.

Obviously this is hypothetical as the chances of ten dads being allowed out to play at the same time is pretty unbelievable!

Beer and Tax

Month 1

Suppose that once a month, ten dads go out for beer and the bill for all of them comes to £100. If they paid their bill the way we pay our taxes, it would go something like this;

The first four dads – 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. And the tenth dad – the richest – would pay £59.

Orient were winning the drinks were flowing and everyone was happy.

Month 2

The next month the bar owner gave them a loyalty discount, cutting the cost of their drinks to £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 realised that £20 divided by six is £3.33 but if they subtracted that from everybody’s share then not only would the first four dads still be drinking for free but the fifth and sixth dad would each end up being paid to drink his beer.

But Orient were still winning and the barmaid was attractive so everyone was happy.

Month 3

So the bar owner suggested a different system. The fifth dad, like the first four, now paid nothing. The sixth dad paid £2 instead of £3. The seventh paid £5 instead of £7. The eighth paid £9 instead of £12. The ninth paid £14 instead of £18. And the tenth dad now paid £49 instead of £59. Each of the last six was better off than before with the first four continuing to drink for free.

Orient lost to Southend, the ale was off and each of the Dads was getting in the neck for going out each month.  So, once outside the bar, the men got a bit gobby and began to compare their savings. “I only got £1 out of the £20 saving,” said the sixth dad. He pointed to the tenth dad, “He got £10!”

“Yes, that’s right,” exclaimed the fifth dad. “I only saved a £1 too. It’s unfair that he got ten times more benefit than me!”

“That’s true!” shouted the seventh dad. “Why should he get £10 back, when I only got £2? The rich get all the breaks!”

“Wait a minute,” yelled the first four dad in unison, “we didn’t get anything at all. This new system exploits the poor!”

So, the nine dad surrounded the tenth and beat him up.

Month 4

Funnily enough, the next month the tenth dad didn’t show up for drinks, so the nine sat down and had their beers without him.

But when it came to pay for their drinks, they discovered something important – they didn’t have enough money between all of them to pay for even half the bill.

Maybe Mrs TTF will let me out this month to claim the free drink!

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