All Tomorrow's Parties

This is a lightly edited response made during Congressional discussion between Joe DaSmoe and sydiot over tax rates. For your reference, here are links to Joe's proposal, sydiot's proposal and PiZ's most recent proposal.

For musical accompaniment: Listen to Bob Dylan, Ballad of a Thin Man, which resembles this debate: http://www.youtube.com/watch?v=-yfO3xchTzE (Youtube link fail) X(

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Some people seem to be missing the point here. In fact, many people. Let me break it down.

The point of low import tax is the grand premise that "stuff > gold."
But as Pig in Zen recently explained very well, supply has swamped demand forcing prices to seek a lower point of 'equlibrium.' In other words, we have TOO MUCH STUFF.

Yes, this brings prices down, but it has brought wages down even faster.

Prices and wage are in collapse mode.
It is a rush to the bottom. Prices and wages are locked in this vicious downward spiral. Level 7 land workers -- the top of the food chain -- are getting 12 USD. That's down from 19 USD last week.

Well, who cares about collapsing wages? The entrenched "stuff > gold" revenue collectors, that's who! They care so much they want to raise income taxes. Because stuff is so superior to gold? No! Because they NEED GOLD more than stuff! The irony!

But guess what? Oversupply is not going away.
The global supply situation is marginally better. We have no reason to maintain import taxes at 1%. The simple fact is that ALL countries have lower prices -- not just 1% import tax countries (of which we are alone).

Maintaining 1% import tax given the COLLAPSE that has been underway for weeks is nothing but faith-based dogma.

Raising import taxes needs to be central
We have two areas where we need to stop the bleeding:
---- The price wage spiral, which is crushing market psychology, especially among workers and business owners who are not in communes
---- Revenues, which are mostly dependent on income taxes

The lowest risk way to raise revenue without causing further player dropout -- they are already being squeezed hard by falling wages -- is to raise import taxes to at least 5% across the board.

Those import taxes are money on the table we are not collecting. In this environment, even Joe's 15% import tax won't deter some sellers, but I don't think it would generate as much revenue.

More importantly, it will send a signal to workers and domestic business owners that they are not shouldering the burden alone.

I can't emphasize market psychology enough. As Aeros noted in his newest article, we've lost 2,000 players in the last two months. And that doesn't include the growing production-for-use commune movement -- including in the military -- that are no longer paying income taxes. As wages collapse toward zero, I believe the commune trend can accelerate. Why wouldn't it? I can fight with Q1s and eat Q1 food just fine on low wages if I have my own supply of Q1 guns from the commune.

My bottom line
My position is mostly unchanged. I dislike the income tax increase, but I can accept it -- and I think I can help sell it -- ONLY if we implement an import tax increase.

I find Joe's point about overseas purchases compelling on lowering the VAT, but Crom seems to make a valid point on the weapons VAT. I could see lowering the other VAT rates to the 2-3% range if that minimizes the revenue loss short term.

I also question the need for our former levels of funding if big chunks of the military are going the commune route as funded by MM2.

The big picture bottom line
Nero, meet Rome. It's burning.