Taxing Pareto Alternative

It's long been commonplace when looking for a way to slice something that masquerades as or even may actually be data to use Pareto.

The famed 80/20 rule. Sometimes cited using either side's ratio of 4 in 5 or 1:5.

Yet different slices are available.

Reminders of the existence of different slicing comes from government tax takes. There are far too many people that shout 'good riddance' and rejoice in the wealthy fleeing their lands. Unaware or wilfully ignoring the fact that when they're gone, the alarming negative tax implications for those 'left behind' that are enormously burdensome.

In the UK for instance, rough numbers often quoted right now appear as 1% of earners make 14% of the income and pay 30% of income taxes. Even if you mischievously water this down, they still account for 16% of all tax revenue. Without them, one pound in every seven disappears causing a catastrophic hole in public finances. Think 1:7. Which ones of your treasured services do you not want reduced by a seventh?

From my time in S Africa, even more stark numbers exist. At present it is stated that a mere three million people account for ninety percent of all income tax. Among an adult population of around 45 million. You can easily gauge an astonishing one in fifteen people contribute 9 of every 10 income tax rand.

And I note too that in America, the 2024 published figures show 'the top 1% paid 46% of federal income taxes'.

Such eye-popping tax share contributions show how we too can take a small number and amplify its sound.

Finding what that previously unseen '1-in' or similar is responsible for in any system can prove a game-changing pitch angle.

Indeed, the revealing Black Swan event number as calculated by Nassim Nicholas Taleb modified Pareto to 1/50.

[This also sparks thought of a relevant tangent in Price's Law. Where the amount of 'actual' work carried out in an organisation is proffered to be done by only the equivalent to the square root of total number of employees.]

And not forgetting that the original theory, stemming from Pareto's wealth distribution investigation in late 19th Century Rome (and also, apparently matching the prevalence of plants bearing fruit in his garden), had a triple split; 80/15/5. (Beloved of stock controllers). Which allows you to understand how shares such as 5/60 or say, 80/40 might also exist in your prospect numbers.

I also recently spotted another view of Pareto. From Aussie presentation tool Canva co-founder and chief product officer, Cameron Adams. Offering this further slant;

“Most things in life you can apply an 80:20 rule too.
Eighty per cent of culture, and eighty per cent of how decisions are made, should be aligned.
Then you have that 20 per cent flexibility where a different culture can express itself."

Venn nerds will not be alone in spotting the flaw in the numbers there. Considering 'culture' and 'decision-making' as two separate disciplines.

Yet we can accept the broad theme. Even down to suggesting an 80/20 split for planning/chance.

On a bid you can begin testing a Pareto hypothesis. Asking a prospect for a standard view of which fifth of something causes four-fifths of another. Hone this figure to generate a proportion which provides impetus to act. One then unique to your proposal.

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