Join the new world

This article is written by Jewitt, Chief Editor, Congressman of TN (UCP), and Economic Council Member. It does not express the views of The Report, the eUS Government or any other law making body in the land.

Taxes

We hate them, but we have loving undertones. Taxation is a necessary fact in this Leviathan which we live under and it is needed in every country for it to survive. There are, in my train of thought, three iron laws about the only uses for taxes (in this order):

1. To regulate the circulating local currency to prevent hyperinflation / devaluation.
2. For building reserves for State Purchases.
3. A savings account for economic, social, or national emergency.

The federal government, proven through test of time, cannot allow the currency to flow into the markets unrestricted. It had made the mistake of coining its own federally-issued currency and thus must be responsible enough to ensure it stays at a value which is appeasing to both the consumer and businessman.

State Purchases are a necessity in this game, much as they are in real-life. Defense Systems and Hospitals are further explained later in this article, but their purchases ensure the jobs of over 40 people on average (per purchase!) and build up our defense so when the time comes, we do not have to spend as much defending our homeland.

A savings account, much like what the Federal Reserve used to be, was ideal to keep funds for offensive conflict, economic incentives, and currency regulation. Now, however, a similar account should be used for the sole justification for projecting eAmerican interests within intra-national spheres and immediate concerns internationally. Reserves should also be held for the event of war and to fund such an event.

Types of Industries

Now that I have described the role and purpose of taxation, I need to now elaborate how I view our Finished Goods markets. It is split into three sectors. These are not the typical "Manufacturing" and "Constructions" industries of yesteryear, but a new economic perspective. These sectors are called "Purchasing Sectors," for the sake of originality.

First Purchase industries are those which are on the top of the list for most consumed and daily purchases. These are the industries which get the daily paychecks of our citizens. Food and gifts fall under this sector.

Second Purchase industries, or "Barely Purchased" as I sometimes say, are the opposing fields of the economy which are only purchased with savings or state-administered funds. These are weapons, moving tickets, and homes. The former two are usually purchased at certain times, such as war or election season. The latter is purchased sparingly, and when it is, the consumer expects to pay a large amount. Most of these purchases also are black market or donated, and thus, are unreliable for tax purposes.

State Purchases are those two industries I have already went over: Defense Systems and Hospitals. Both take up huge and massive portions of the economy. A single high-quality Defense System could put to work over 40 workers; a good stake in our economy. Taking into consideration these companies keep wood in business, despite housing's inconsistent consumer market, also are vital to our #1 export.

Raw Materials

There are, of course, five types of raw materials in-game. Grain, Wood, Oil, Diamonds, and Iron. In that order, also, is how important they are to our economy in the eUSA. These raw materials are then broken into two sub-categories, which are pretty predictable:

Domestic & Exporting raw materials are Grain, Wood, and Oil. We have high regions and are able to produce large amounts at any given moment. They also are very easily exported, and with Wood and Oil we bring in hundreds of GOLD a month of foreign currency. They are vital to our economy and must be well conditioned. Due to this, it makes it hard for foreign competitors to come in and "flood" the market in these three. This will be covered in a later issue which will be dedicated to Tariffs.

Dependent & Importing raw materials are Diamonds and Iron. We hold no High Resource regions for these, and due to this, it is extremely difficult to produce these goods which need to be imported from foreign markets. To add to this, we must keep low tariffs to allow businesses to keep their own prices down. Oddly enough, this epidemic is split. Their finished goods are in different Purchasing Sectors, one (Diamonds) is a First Purchase and the other (Iron) is a Second Purchase.

Tariffs for Raw Materials will be determined in a later article, but for the sake of argument Dependent raw materials should have no more than a 8% import tax, while Domestic raw materials should have an import tax of no more than 75%. What? No more than 75%? Yes, but that will be explained much later on.

Income Tax - Your Money, not Uncle Sam's!

When I mentioned Uncle Sam, I mean the iconic character, not the politician (though their tax views could be seen as similar). Income tax is a terrible thing, but it is needed; a necessary evil. The government should have as little of an influence on your paycheck as possible to promote positive consumerism from the workers. Income tax, though a steady and constant trickle of income for the government, should be treated as such.

Supply and demand check. Lots of supply (income tax), and little demand (low government spending). Naturally, the income tax should be, and consistently stay, at a low single-digit percentile. My personal suggestion would be no more than 8%, though I have not the math to back it up at the moment. That will come with time.

Another notice about income tax is that before the CTPA was passed, it was per-industry based. This is just inequality and selectivity at its finest. No work environment should be given unequal taxation permanently. For short bursts of government revenue this may be accepted, as in the situation of the Federal Reserve's hacking and fire sale, but as a tax policy it should be seen as unconstitutional.

All income tax should be, and must be, uniform per all of the industry across all sectors and in ever business.

Value-Added Tax

I am a supporter of "Let the Consumer Decide." By taxing a very small portion of their income, the consumers are given more money to spend. This in turn will help turn the wheels of the economy and fuel the juggernaut that is the eUS Market.

However, the government does need to make up for lost revenue. Remember, the government must still make State Purchases and having a savings account. With such low income tax, it would be hard to make any positive string of income. This is why I have previously divided the Finished Goods industries into three separate sections.

I previously preached, "It should be unlawful to tax on a per-industry basis. This has always been the preemptive motions of planned economies." In a sense, this is still quite true. Due to the mechanics of eRepublik and my new found knowledge of government revenue, I have had to amend my previous view.

The VAT, or sales tax (VAT is a misleading term and the eRep Admins need to change it to something more appropriate), should be on a per-Purchasing Sector basis.

First Purchases should have small VAT figures, at or below 10%. I have no numbers to back these statements up, and I plan to release an article much later once more insight is given to government spending (and give exact figures, at that!). For reasoning, see the following sections.

Second Purchases should have slightly higher VAT figures, at or above 10%, to compensate for their few purchases. This does seem a little "government interventionist" when it comes to toying with industries, but this is also based on a supply and demand model which will be explained in further sections.

State Purchases should have 1% VAT, period, no exceptions. Why? Why should the Hospital and Defense Systems companies not pay VAT when everyone else does? Who is making the purchases? Who is taxing? When you have one consumer (the government) it changes everything. VAT is not needed since even if VAT was 99%, that 99% would go back into the eUS treasury. It makes no sense to misrepresent the true price of on-the-market Hospital and Defense System products with uneven VAT figures. A 1% VAT is the only logical and true VAT for this sector of companies.

First Purchases

When there is a consistent income for anyone, it puts less strain on their checkbooks and treasury staff. First Purchases are bought, like it describes, daily with paychecks. Due to this daily income and predictability of purchase, they have less risk and more income per day collectively. It seems logical to give them a lower VAT, as it offers many benefits.

1. It is consistent revenue for the eUS Government.
---A security that is needed no matter what country we are speaking of.
2. It should be a small, single-digit figure, to allow for larger purchases and more consumer power.
---This is to ensure that prices stay low, and purchasing power remains strong.
3. With a smaller VAT, it allows the companies to bring in more profits per sale collectively.
---These profits from the companies would trickle down into the workers and consumers both.
4. A smaller VAT also allows for lower grade domestic companies to have a competing edge.
---This adds to competition. The positives are felt to the consumer, worker and entrepreneur.

Note that no matter what VAT is decided upon, it should be uniform to all First Purchase industries.
These are food and gifts.

Second Purchases

These companies are used to weathering the tough atmosphere of unpredictable market trends. Weapons especially go through painful cycles of price dropping, gouging, and hyperinflation all depending on various market, political, and economic trends.

Due to this, Second Purchases should have slightly higher VAT ratios than the First Purchase industries. Now, this makes little sense to the socialist or lobbying business owner. It could be seen as a direct attack against weapons and, slightly, tickets. However, here are some points to consider, in no particular order:

1. Government must retain revenue and it is losing with the above policies I suggest.
2. The consumer only purchases these funds on-market with savings, given a few exceptions.
---Most consumers are willing to pay slightly more for these goods collectively due to the next point.
3. Since the VAT is lower on daily purchase items and the income tax is lower collectively, it should be figured to even out the win-loss conundrum.
---Ask yourself: Would you pay 5% less in food every day in return for paying 10% more in weapons, a product you barely use? Would you rather be taxed 8% for both industries, regardless if there are any wars or not?

These points are based, once again, upon my using the supply and demand strain of ideology to taxation. There is little demand of weapons and tickets, but little supply as well. Most weapons companies shut down in peace and many ticket companies rise and fall at unpredictable rates. This also makes it a risk on the consumer and government, and thus, should be taxed slightly more since it cannot be relied upon for revenue.

The consumer will be affected on the following terms:

1. Weapons in war will be, generally, more expensive than they usually are.
---However, the eUS Government is working on an efficient system to distribute weapons to registered Army and eMarines soldiers free with use of a revised Quartermaster General (QMG).
2. Tickets will be, collectively, more expensive. Tickets, though, are a constantly fluctuating market. At any time they can go from 16 USD to 23 USD in a matter of a few days. Due to this, a 10% or so tax will do nothing but raise the floor a few dimes per product.
---Also consider that tickets are purchased on a "need it now" basis, generally, and prices usually drop during war and elections due to over-supply and a jump in demand. Before prices have time to hike, the spurt of purchases have ceased, generally.

Homes have been excluded and are a rare and individual industry. All consumers, however, go about purchasing a house in one of two ways: Black Market or on-market. Ignoring Black Market transactions, on-market transactions are often purchased for higher Q homes (Q3+ generally speaking) or for Q1 when it comes to the two-clicker factor.

When one goes to purchase a house, they expect to pay big. A higher VAT tax than the previous 5% would add little difference to the large price. A 300 dollar Q1 house, that would cost 315 USD after current taxes would cost (assuming 10% VAT) now 330 USD. A minimal indifference when it comes to the multitudes expected to pay out.

State Purchases

State Purchases are needed to support our wood industry and national defense. Accusations have been used lately, especially by the "Second V1 Generation," those which were eBorn between the first of December and now. They experienced the government's failures in France and have yet to see stability which has always been in this nation until the CTPA and Federal Reserve Congressional Response actions. They have also, on fewer numbers, not learned the distinction between in-game economic mechanics and real-life truths.

State Purchases are needed and should almost never be put down unless the price is outrageously greedy. Many have gone so far to say that there is a monopoly of Defense Systems and Hospitals. Although true in real-life, it is false in-game. Congress sets the price or the company does not sell and has to close down shop. Despite what some believe, the companies themselves rarely set the price, but submit in a "requested" selling price and we analyze the costs of production and consider the profits to be made and see if it is worth the transaction. Some purchases can take up to a week of debate between Congress and the company.

That aside, there is a lot at stake. Minimally, each purchase employs 20 workers for the Hospital or Defense System company and 10 workers per raw material company. Myself and many others included like to say it takes two raw materials companies to supply one of these construction companies and the true fact is that is not far from mathematical fact.

One Eye has done a break-down of expenses and requirements to aid in pricing these purchases, and in them he estimated the average amount of wood and suppliers (separate companies) needed to fulfill each item. Every construction purchase employs, no less than, 40 workers. To those who said we should not buy these constructions unless they are absolutely needed (as in war is approaching), tell the 40 workers per constructions company that relies on our purchases. Assuming four of these companies are working now and actively selling, that is 160 workers employed, possibly more, for these purposes.

Added to this is defense and national pride. When we have defense systems we have better defense, and it is an investment for any future battle that may be waged there. All hospital purchases are investments to reinforce the defense systems and allow more citizens to fight without moving or being displaced. As we speak, we have passed legislation (actually, two months ago we did) to only purchase Q4 and Q5 hospitals, and Q3+ defense systems (though many will only accept Q4 and Q5).

These investments do come at a cost, but that USD is given back to the company to repeat its processes: Fuel the wood industry and employ 40+ employees.

Synopsis

Many have labeled my views. Socialist, Capitalist, Totalitarian, Libertarian, I have even heard "Fiscally Conservative" out of context a few times. I refuse to label myself, though I will not ignore the fact that I tend to agree with Libertarian sentiments on taxation, but with Authoritarian sentiments when it comes to government spending.

May this article be a better indicator of my views and how I hope to push for legislation.

________________________________________ ____________________________
To Do List:

Vote this up. Why? So people can do their hate-message ritual.

Subscribe if you liked it. Subscribe if you hate it. You can't rely on votes to bring this to your attention, and I love it when people express the opposite opinions of my own. It brings about progress!

Vote tomorrow for whomever you think would do the job closest to your views. With this article, I am sure some could tell who I would vote for. Do not miss your chance to vote, it is +1 in EXP and aids in democratic procedure!