Child's Guide to Taxation Evolution

Niceville, or Fairhaven? Where do you live?

Once upon a time there were two neighboring towns, a town called Niceville and another called Fairhaven. Niceville was named for all of the nice people in the town and wanted to be nice to everyone. Fairhaven was named because everyone wanted to be fair, they were also nice people.

There were 100 families in Niceville, and they were very busy people. They all worked every day and earned enough money to take care of their families, the average family earned $100 per week. Naturally some made more than others, but everyone was happy, there were jobs for anyone who wanted one.

One day, a Nicevillian man got very sick. A friend of his suggested that they all pitch in to help a family who’s Daddy couldn’t work or buy any food for his hungry children. Niceville people were very nice, and so everyone wanted to help. Everyone who was still working gave $1. They raised plenty of money to help the poor, sick man and his family, All 99 people contributed $1 to the poor family and now everyone had $1.00 less to raise their own families, but the sick man also got $99, which was about what everyone else in town earned in a week.

Soon, another man got sick, and again the good working people of Niceville helped, except of course for the first sick man. They all gave another dollar, and so each now had $2.00 less, but the sick received money just the same as the healthy. The people in Niceville were very nice about that. They all now received about $98 every week, most worked to earn it, some didn't only because they couldn’t.

The first sick man seemed to be getting better, but he didn’t go back to work right away. The townspeople of Niceville were nice and so didn’t question why he didn’t go back to work. They continued to pay him every week, after all, two dollars wasn’t hard to contribute.

The second man saw what the first did, so he didn’t go right back to work either.

A few more Nicevillians began to get sick, and with each one, there was less and less generosity because the working people of Niceville had their own families to worry about.

Barry was the second to become sick and had been receiving money for several weeks now. Barry suggested to the townspeople: “We need to have a fund into which everyone pays that will help our poor and sick people. We can’t have special meetings every time someone gets sick in Niceville. I will manage the money for you, since I can’t work anyway. It will only cost $10 a week, and we can help all of those who need help in Niceville.”

Well, $10 a week isn’t so bad, still, some didn’t like it. They didn’t think it was fair that people who didn’t work were paid anyway, but mostly everyone agreed it was a nice thing to do. Now all the workers had about $10 less so they couldn’t buy quite as much at the stores anymore, and some of the storekeepers made less too, but every sick person would be cared for. They couldn’t pay them as much as before, as there were more of them, but most of the healthy people wanted to help.

A few store employees had to be laid off because the store was not making enough money to pay them.

Soon there were more and more Nicevillians getting sick, and losing their jobs and so they asked Barry for more money from those who worked to help the families because $10 was not enough anymore.

The sick and unemployed families really liked Barry. They would bring him pies and cakes and even give him some of their money because he helped them. Some of the working people in town didn’t like the sick people anymore because they thought some of them weren’t really sick. Some of the sick Nicevillians were seen fishing and swimming in the Niceville lake. It was a very nice lake.

One day, Barry had a meeting and asked everyone for more money because there were more sick people to care for than he had thought and some had lost jobs. He asked for 15 more dollars because there were now families without income, and he said we will all have to help. Everyone should have to sacrifice because Niceville was one big happy family.

Now since the average earnings in Niceville was $100 per week, some made more and some made less, with 10 Niceville families unable to make a living because they were sick or lost jobs, and 90 healthy and working, each working family now got to receive an average of only $90 per week. If they had to pay another $15, the remaining working families would only have about $75 each now.

Some of the townspeople didn’t like having to pay $15 more to those who didn’t work because they already had to cut expenses back or work more hours to pay their own bills now and weren’t really sure they were even sick. Some people didn’t mind, they were happy that they were not sick, or could afford a little more but others couldn’t buy their own children things that they wanted and said: “We don’t want to pay any more, $10 is enough.”

The town held a vote and voted on whether to pay $15 more per week to the sick fund. Well, now there were 40 sick families and they all naturally voted for the increase, and of the other 60 families, 15 voted for it, mostly those who made a little more money than the others, or those who had sick relatives and friends. Only 45 voted against, so the increased funding for the poor passed 55 / 45, which Barry happily declared a victory for the poor and the sick. Each family who now earned $100 got to keep only about $75 each week. Unfortunately,the sick families now had even less because there were many more (40) of them now.

Many of the sick families, especially those who had been sick for a while thought this $15 more was not enough. They argued that they were now getting far less and that it wasn’t fair. For a town to be called Niceville, they should be able to do better.

They argued the math:

60 working families paying $25 per week is $1,500 to be shared by the non-working families.

40 families dividing $1,500 is only $37.50 each, while working families get to keep $75 each, or twice as much. That wasn’t fair. It wasn’t nice. Barry said: “We’re better than this. We can do better for our poor and sick.”

Some suggested that there were families who made more money than the others and so should pay more. They said that 5 families who earned $500 a week paying only $25 per week wasn’t fair. They thought that it would be more fair for them to pay $150 or more to help the poor and sick because they believed that they weren’t paying their fair share.

Well, another few families got sick and now there were 51 sick families who said they could no longer work to support their families. They all asked Barry to help them because there wasn’t enough money deposited into the fund now that only 49 were still working and paying into to it. Barry called another meeting and again asked for more money. This time he said:

“We have a crisis, 51 families are not working and are poor and or sick. We have only 49 working families, and so we need to have $50 per week from everyone to help care for our people.” This left most of those still working with only $50 each. Many more were very angry and demanded another vote because the working families didn’t believe it was fair to take more of their money to give to those who did not work.

Well, all 51 sick families voted to have more money taken from the working families, and this time, more working families objected, of the 49 working families left, all of them now voted not to raise the sick fund when some had voted the other way before. But it was too late. The vote was 51 to 49 to raise the sick fund contribution to $50 per week per working family.

Barry and all of the sick and unemployed declared another victory for the little people, because now the sick and non-working were receiving more than most of the working people in Niceville.

Soon it was found out that 49 families contributing $50 per week was not enough to care for all of the 51 other families in the town. They needed more money for the poor and sick. What now?

Ten new families moved to town. None of them had jobs and so asked Barry for some help. They were from Fairhaven, the little town across the river that tried to be fair to everyone rather than be nice.

Barry was happy to see them. He knew that a vote of 51 – 49 was not very strong majority. What if two of the sick people wanted to work again? Now there were 10 more on his side, he knew any vote now would be 61-49.

Barry saw trouble brewing, so called another town meeting for a vote. At the meeting were 61 families who didn’t work, and none of the working families showed up to vote. Barry thought this would be easy now. It would be unanimous. It was.

Fairhaven was a town across the river. The people there were nice too. They valued fairness more than niceness. Some of them had heard of Niceville and had moved to Niceville because they didn’t want to work anymore. Those who stayed in Fairhaven got to keep all of the money they earned.

Next time Barry called for a vote to increase the fund, again, no working families showed up to vote, so the vote was unanimous in favor of more funding for the poor and sick. They established a new funding contribution schedule that everyong believed was more fair. Those earning $100 still had to contribute $50, but those over $100 and less than $300 had to donate half of their earnings, and those over $300 had to pay 75% of everything they earned. The vote was again unanimous. They all voted for the increased contributions. 

Unfortunately, soon there were no working families remaining in Niceville to contribute to the fund as they all moved across the river to Fairhaven.