Wordspeak (Posts about Politics)

Justifying tax cuts for the rich?

Edwin Steele — Sat, 27 May 2006 10:40:42 GMT

The Australian Government recently delivered the budget for the 2006/07 financial year. It caused a bit of a ruckus because the tax cuts were aimed primarily at high-income earners. This week I received an email defending those tax cuts. It surprised me. I wasn't surprised that people are greedy but I was surprised at the lengths they will go to in order to justify it. People are going to see this email so you might as well see it here with some perspective. Honestly, it's a well written story but it's just not as simple as the email makes out:

Emotive introduction

At last, a proper explanation for the whingers that believe the wealthier are 'given' too much... Here is the REAL story to lighten the Budget discussion! You've heard the cry from across Australian the last couple of weeks: "It's just a tax cut for the rich!" - and then it's accepted as fact. But what does that statement really mean? The following explanation may help.

Catchy supporting story

Attributed to Prof. David R. Kamerschen, Professor of Economics at the University of NSW.

Suppose that every night, ten men go out for dinner at La Porchetta's. The bill for all ten comes to \$100. They decide to pay their bill the way we pay our taxes, and it goes 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 are quite happy with the arrangement, until one day, the owner says:

"Since you are all such good customers, I'm going to reduce the cost of your daily meal by $20."

So now their dinner for ten only costs $80.

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

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

The fifth man pays nothing (like the first four) instead of $1 (100% saving)
The sixth pays $2 instead of $3 (33% saving)
The seventh pays $5 instead of $7 (28% saving)
The eighth pays $9 instead of $12 (25% saving)
The ninth pays $14 instead of $18 (22% saving)
The tenth pays $49 instead of $59 (16% saving)

Each of the six are better off, and the first four continue to eat for free, as now does 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 then 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

My perspective

While it's a cute story, the problem is that I can't remember the last time I saw 4 low-income earners regularly eating out at a restaurant. Most of them have their hands full just coping with rent, basic food and childcare. Forcing a high-income earner into a "tight-spot" where they can only upgrade their late model car every 2.1 years instead of every 2 years just doesn't weigh heavily on my social conscience.

I've been at both ends of the tax spectrum. This "whinger" still reckons reducing the rate for the top 2 tax brackets doesn't help those who really need it most... target the bottom brackets and then some low-income earners might make it to La Porchetta's once a year for a treat... perhaps.

I hope you'll remember the other perspective the next time there's mention of tax cuts for high-income earners.

The Muhammed cartoons - what's really going on?

Edwin Steele — Sat, 18 Feb 2006 07:41:30 GMT

The extreme reaction

Each day last week I've heard something about these cartoons. One day the Arab world is boycotting Danish products, the next day Europeans are being warned that they are not safe in the West Bank and ambassadors have even been withdrawn. Then a bunch of Norwegian peacekeepers were bailed up in their compound in Afghanistan. I'm sure many of us are throwing up our hands and saying "There go the Muslims again" but there's something deeper happening here. We've all seen behaviour that, from our cultural background, seems irrational but to those from a different background it is perfectly natural. This is what we have here. Now, not every Muslim has reacted violently. There haven't been mass protests in my largely Muslim suburb but that doesn't mean the Muslims around me aren't true believers. I expect many are angry, shocked and disappointed but have not taken to the streets to express their feelings. The protests, however, have been consistent, strong and well supported from the Muslim community right across world, so obviously something has touched a nerve.

Free speech and post-modernism

It's common in the post-modern, western world for people to openly challenge what is sacred, what is assumed and to speak on topics that are taboo. This is less common, generally speaking, in the Muslim world. I am used to seeing biased views, factually incorrect statements or satires on my faith and so I challenge them where I can, using my same right to express an opinion, but at the end of the day I know that people will always challenge what others believe. I am used to it but I doubt they are. To someone in a country without the right to free speech it would be even less common. It is countries like Iran, Saudi Arabia, Syria, Afghanistan where free speech is not in the common psyche that have reacted strongest. One can look at the response of the Turkish community in Germany, the Lebanese community in Australia and the Muslim community in the U.K. and see that those in countries with free speech have reacted in a different manner.

Effective (and ineffective) Cross Cultural Communication

Globalisation is a reality. My car is assembled in Thailand, my computer is designed in the USA and assembled in India. My shirt is made in China. The global neighbourhood is becoming smaller. If you want to communicate with someone in England you do so in the English language so that they have the best chance of understanding you. If Fijian tribal tradition requires you to wear a green hat when speaking in public, you wear a green hat so that you maximise your chance of being heard. Now, if the Muslim community wishes to communicate effectively with Denmark, the E.U. and the west on this issue they should do so in a way that maximises their chance to be heard. I doubt most people have a problem, conceptually, with people reacting or being angry with someone offends them. I doubt most people would have a problem with a street protest. People do, however, have a problem when people are threatened and people are killed. I, for one, find it utterly bizarre that people are resorting to acts of violence to protest against images of a bomb-carrying prophet. It hardly endears me to their cause.

The focus of the protest

"Blasphemy! Blasphemy!". If the Islamic community wishes to actually make progress in matter of these cartoons rather than simply let off steam, they should change the focus of their protests. This "blasphemy" is a natural by-product of free-speech just like parliamentary elections are a by-product of democracy. If you wanted to purge your country of elections, start talking about why democracy is bad. If you're unhappy with the "blasphemy", start talking about whether free-speech is appropriate in it's current form. For every person shouting "Blasphemy!" there is one shouting "This is free-speech - if you don't like it, don't read it". Shouting at one another generally achieves very little. If you want to be heard and make your point, focus on the root issue rather than it's by-product.

Can something constructive come from this?

There is great potential for a constructive, inter-cultural dialogue to come out of the publishing of these cartoons and the response to them. There is also the potential for this to be just another case that increases the divide between the Western and Islamic world. I do hope that the constructive contributions from the rest of the world are heard over the violent, sensational protests that the media loves to focus upon. I also hope people present clear and concise points of view that make everyone stop and think, even if we then return to where we were. At least there will be a greater level of understanding and appreciation of the other... or are we just more interested in shouting at each other and making ourselves feel better?