Reasons why YOU WANT to PAY MORE TAXES! :)
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by omniscient
Topic: Self interest behavior and Income TAXES
Dear citizens of eRomania
You have come from different countries to find a place here in eRomania and i would like to thank you AS A CITIZEN for choosing this country! I know this country is not very friendly to immigrants, due to their stupidness, but you should know that there are ppl like me who are greatful for you choosing this country. You decided to support an ally despite the fact that the economic situation in eRomania is desperate. The prices of all articles, especially guns, are low, entreprises have reduced employment in the last month further decreasing the salaries! I remember the debate i had with some of you where I was arguing that Low salaries translate into a Lower population and NOT into more firms appearing in the market! And i was right! every second employee in my companies does not speak romanian!
I said that when an individual becomes atomistic, his personal interest counts with a heavier weight. I don't wanna make this story too long so I will get straight to the topic. I would like to debate a new issue:
Should Romania raise the income taxes more? Is that in our interest? Should we have more redistribution? And if yes, then HOW!?
I would say: YES! Increasing the income taxes in this game is a good idea in this PARTICULAR SITUATION for eRomania! Why? (Not necessarily for other countries)
We all know that soon eRo will face a war, and if we don't want to cease to exist we need guns!
The Economics of buying guns:
It's interesting that EVERYONE of us, would LIKE his neighbor to BUY a Gun and fight (this increases the demand for guns which increases the demand for labor and also increases the demand for iron (and again increases salaries for both: manufacturing and land) ... and also the government has some income and can further make programs for newbies... So EVERYONE BENEFITS WHEN WE FACE A HIGH DEMAND)
Also, everyone of us benefits when somebody comes to romania and Buys a GUN and fights with it as well! The economy is propelled by consumption! And the more expensive gun they BUY, the better!
However, when it comes to decision-making foe EVERYONE of us, we think twice before spending our hard worked money for a gun... we think: is it worth it? Should I do it or should I Save my money?
Let's examine this Worthiness of buying a gun!
First of all we examine, how many damage points will we get from each gun. (for the sake of promotion) (self-interest approach - and 99% of all the guns are sold purely because of this reason)
Secondly you examine the PROBABILITY of winning or losing the war.
Thirdly you can think if it matters if everyone else buys a gun or not. (AND MOST IMPORTANTLY: How does your decision of Buying a gun change if everyone else decides to Buy or refrain from buying a gun)
1. If you're not at least a sergeant, it's simply not worth buying a q2 gun! Better buy 2*q1 guns, because 2q1 guns is roughly the same price as a 1q2 gun. PLEASE note, that this is my advise despite the fact that i own a Q2 gun factory!
2 and 3 come together after deciding for the optimal quantity of guns to buy in the 1st point: If the Probability of winning a battle is VERY unlikely, you will not want to sacrifice additional resources to buy a gun! Why? because you're attomistic and it doesn't mattter if you buy or not a gun! HOWEVER, if everyone else BUYS an additional gun like you, then the probability of winning increases and EVEN if you know the enemy country is stronger in absolute terms, you know that if everyone of us decides to spend an additional Small sum of money (0.1 gold per a q1 gun), the Government of the enemy country (in particular Hungary) will have to counterbalance the additional force by buying AT LEAST AS MUCH as we aggregately decide to spend.
However, the marginal cost for every individual is very small, but for HUNGARY the additional gold it will have to spend to counterbalance the defense is HUGE (a lot of gold). Therefore it will be MUCH MORE expensive for hungary to conquer one region in eRomania.
However, because on the individual level we DECIDE to save money, we get a Worse outcome that our region will be conquered. When a region is conquered, we lose some demand for workers and the salaries decline in real terms.
So check this out: We are interested in spending 0.1 Gold ONLY if everyone else does, because in this case we won't get our salary cut off, and we also won't get under a tyran occupation.
That's why we need the Government. If everyone will pay taxes, provided that WE BENEFIT from those taxes (like with guns in case we are attacked) then IT IS IN our interest to Pay more taxes, because it represents the optimal redistribution of resources given the preferences of atomistic individuals.
Of course, once we secure ourselves and inflict a great damage on the enemy, I would ge against higher taxes... but given this situation, and given that Podolia is not in Romania yet, I would vote for a tax increase from 15 to 25 % , prodided that WE benefit from it MORE than we encounter costs.
Please leave comments 🙂
Adrian
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Comments
voted!
thanks.. but this is not the type of comments i was expecting 🙂
i wanna see reaons: why and why not 🙂
No goverment in the eWorld has the ability to donate guns to the people that whant to fight for her. The number of people is to big, the time you consume to donate guns for only one fighter is to long and you can't track them if they used and were did they used.
This is an old discusion and alway ended with one conclusion: It is imposible to implement.
nice article but make it smaller please. I came from the office and i want to relax, conseqently i lost the second part.
Radar.2 , I think it is possible: and here's the trick how to do it.
1. You donate your local currency to the National Bank through a law.
2. The National Bank donates the equivalent money to the chosen Army NGO-s (like the Air forces or the GN) that it trusted for buying X amount of money plus 3-5% for the transaction costs (you're basically paying a salary to those who will be doing the tedious job).
3. The NGO-s must Transfer 1/2 of the MONEY from what the price of the gun costs back to the National bank! (You are subsidizing guns, NOT completely giving away them for free... for the reason of why you should avoid doing that, read my first article)
4. Each NGO sells the guns at a 50% discount to its members (you pay for 1 gun, you get too).
This rule is self enforcing, and then in order to equalize the demand and the supply for the guns (because there will be many Military organizations wanting to BUY the guns for a discount, the National Bank can auction them Right to buy the guns at a discount price, therefore recovering a part of its subsidies and moving the economy more towards a market economy! (and therefore a fair economy)