Ideasroom

A story of tax, wealth and Easter eggs

Dr Michael SW Lee uses an Easter egg hunt analogy to explain wealth distribution and our innate sense of fairness

Ten kids are at an Easter egg hunt searching for 100 eggs.

Donald was fortunate, he inherited an Easter egg detector. He spends four hours looking and collects 40 eggs.

Steve is a hard worker; he spends eight hours looking without any inherited advantages and ends up with 40 eggs as well.

Sam is also a hard worker. He spends eight hours looking, but in the wrong place, ending up with five eggs.

Molly is short sighted; she can’t afford glasses. She spends 12 hours looking and finds five eggs.

Frankie is wronged. She spends eight hours looking for eggs but leaves them lying around. When she comes back, a portion of her eggs are missing, leaving her with only five eggs.

Max is talented. He spends six hours looking for eggs, finds five, then gets bored and helps the parents prepare snacks for the benefit of everyone.

Sally is unlucky, she twists her ankle and can’t look for eggs.

Judy and Florence are compassionate, they spend the whole day caring for Sally, rather than looking for eggs.

John is disengaged. He doesn’t feel like doing anything so doesn’t find any eggs.

At the end of the day, the parents realise Donald and Steve have 80 percent of the eggs.

They ask the two boys if they would be willing to share their eggs so everyone has 10 eggs each.

I think most people would agree that aside from John (a minority of the population), everyone else deserves a fairer share of the eggs. Personally, I’m interested to know why John is disengaged, rather than just assuming he is ‘lazy’. But for now, the question is how many eggs do you think Steve and Donald should keep for themselves? All 40? 30? 20? 15?

What if research indicates that kids need eight Easter eggs to be happy? This requires Steve and Donald to share more than half their Easter eggs with the group. But they would still have 18 eggs left each. More than double what they need. But, more importantly, everybody gets enough eggs.

What if research also suggests that with fewer than seven eggs, kids would be traumatised for life? In this scenario, Steve and Donald would share less than half their loot, enabling them to keep 22 eggs each. Nearly triple what they need, but the majority would be worse off.

Imagine, if one boy said they would be happy to share most of his eggs while the other said, “No it’s not fair, they’re my eggs!” Which boy would we think was more admirable? Which kid would we be proud to call our own?

Now, imagine if Donald and Steve were made to share half their eggs. This means they keep 20 for themselves, but at the next egg hunt they could each start the hunt with their 20 eggs already in the ‘bag’. Would that be fair? If they found another 40 and ended up with 60 eggs each how many eggs should they be ‘made’ to share then?

Translating eggs to wealth

While adult life is more complicated, that is the reality we live in. Less than 20 percent of the population own most of the eggs. So we should probably reconsider how wealth is distributed. Yet there are a few ‘reflexive responses’ that seem to spring out of people when it comes to discussing the government version of sharing, namely taxes.

“Shut up you commie / Marxist/ Socialist!” No, Steve and Donald are taxed some of their eggs, but they can also keep more eggs than the rest.

“Stop punishing the rich/successful.” This response occurs when people obsess over how much they stand to lose rather than what everyone stands to gain.

“I’m not a child, so don’t treat me like one, with your nanny state!” Indeed, hardworking adults are not children, but some seem to have forgotten how fairness and sharing works.

“Poor people should have paid more attention at school or chosen work that gets them more eggs!” Plenty of essential work contributes to society but is chronically underpaid. We need to pay more for these roles in order to retain and attract talent.

“I don’t get a lot of value from my tax, let’s go user pays.” People tend to take things for granted when they don’t pay for it explicitly. To get more value out, we need to put more value in.

“If you take too much from the successful, they’ll just move their wealth elsewhere.” Only because some parents/countries have been letting their kids get way with hoarding Easter eggs. But the global appetite for this is fading fast.

“Life’s not fair.” No, but humans are the only creatures on earth that strive to make things fairer.

“I don’t want ‘bludgers’ benefitting off my hard work!” Nobody likes a free loader, but they are a minority.

“It’s not my fault people have kids they can’t take care of!” That’s why we need to create a system that provides people with more options in life.

“I worked hard for my advantage. So it’s my right to pass this onto my children.” As a parent, I can identify with that. But when is enough, enough?

“Easter eggs and money are different, grow up!” Some people have a problem understanding metaphors and analogies.

The reality is that when one minority group holds most of the wealth while another ‘bludges’, only the former group has the resources that can be used to lift everyone’s standard of living. It does not seem fair, but that’s because we have such an aversion to unfairness that we can’t help but focus on the minority of ‘bludgers’.

We need to remember that the actual number of people gaming the system is less than 10 percent. Yes, it’s frustrating when a small group takes advantage of our ‘hard work’, but it’s even worse if we let them rob us of our innate sense of fairness and generosity.

This is an abridged version, for the full article, click here.

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