Tax drives wealthy charitable away

Jan Cameron moving to Australia because of our tax rules is a golden example of what happens when the won't be flexible. And she is far from the only high net worth individual to have fled.

In this case she actually wants to donate a portion of her to charity, but nope.

If Cameron manages a 10% return on capital then her income would be around $30 million a year, so that is $12 million a year in lost tax revenue.

This is why the tale of the ten restaurant diners is again worth repeating:

Everyday 10 men go to their local restaurant for dinner, the bill for all ten comes to $100.

If it was paid the way we pay our taxes, the first man would pay nothing, the second $1, the third $2, fourth $3, fifth $4; the sixth would pay $7; the seventh $10; the eighth $12; the ninth $15. The tenth man (the richest) would pay $46.

They ate in the restaurant every day until the owner threw them a curve. He reduced the cost of their meal by $20. Now dinner for the 10 only costs $80. The first four still eat for free. The $20 savings among the remaining six gets split. The men realize that $20 divided by 6 is $3.33, but if they subtract that from everybody's share, then the fifth man and the sixth man would end up being paid to eat their meal.

The owner decided that it would be fair to reduce each man's bill proportionally and he proceeded to work out the amounts each should pay. And so the second man paid nothing, the third $1, fourth $2, fifth $3; the sixth would pay $6; the seventh $8; the eighth $10; the ninth $12. The tenth man (the richest) would pay $38.

Outside the restaurant, the men began to compare their savings. ‘I only got a dollar out the $20,' declared the sixth man pointing to the tenth, ‘and he got $8!' ‘Yeah, that's right,' exclaimed the fifth man. I only saved a dollar, too. It's unfair that he got eight times more than me!
‘That's true,' shouted the seventh man. ‘Why should he get $7 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 he didn't show up for dinner, so the nine sat down and ate without him. But when it came time to pay the bill, they discovered something important. They were $38 short!

And that is how our tax system works.

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