The trouble with fixed costs

In 2004, a German lawyer, Dr Juergen Graefe, acted for an elderly pensioner from St Augustin, near Bonn, who was sent a tax demand for €287 million, even though the woman’s income was only €17,000. Dr Graefe fixed the problem with one standard letter to the authorities, but as German law entitles him to calculate his fee based on the amount of the reduction he obtained, his fee came to €440,234 (£308,000). It will be met by the state.