Imagine a group of 5 people. They have an income distribution of $10, $20, $30, $50, and $100 . Someone gets the BIG idea of everyone putting 40% of their money into a hat, and dividing the result equitably between everyone.
That means $4, $8, $12, $20, and $40 goes into the hat. That’s $84 which when divided by 5 is $16.80 .
Another way of looking at this result is that the amounts paid were -$12.80, -$8.80, -$4.80, $3.20, and $23.20 . The poorest three people paid negative amounts (negative taxation), meaning they received money, and the richest two people […]
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