Taxes, Schmaxes...
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by SensibleVoices
Today we are going to talk about a topic no one likes to talk about. No, we're not talking about Michael Jackson's comeback tour. I hate to talk about it, but it's that time of the year again. Today my friends, we will be discussing about the necessary evil called taxes.
Taxes-Schmaxes!!
When I first came to eRepublik, I assumed that I would be coming to a Utopian world with no vice. There would be No War, No Slandering and most importantly – No Taxes. I was quickly disappointed to see that War and Slander were very much present here. But it took me about a day or two to realize that I've been paying taxes too.
The first job I did was on minimum wage - $1.5 in a gift company, which at that time was taxed 5%. I received $1.4, so I didn't complain losing a dime to the Government. Later on, I moved to a Food company, and son of a gun, I was ripped off! Not by the company, but because of the taxes. I was surprised that I was being taxed more because I was working in the Food Industry. Upon further inquiring, I found out that even my boss had to pay more taxes, just because he was making food.
Now, Isn't that grossly unfair? Shouldn't everyone expect to pay equal taxes regardless of the industry they are working in?
People don't realize that an increase in Income Tax rates in any industry has a ripple effect that can damage the overall health of a specific Industry. Let's take an example, say the 'Gifts Industry' has its Income tax increased to 10%. Due to this the owner of the company has to reduce spending and may decrease the wages of his employees by 5-10%. The employees, who are already burdened by a high 10% Income Tax, will receive wages which are even lower. Thus, the employees will eat cheaper food and may not save up for a house and may not maintain good wellness. This leads to lower productivity. Which is bad news for the boss again, this would lead to either an increase in the price of the goods or a further decrease in wages. And thus the treachery goes on and on and on. Also the employer will have difficulty to employ newer employees because everyone would prefer a company which has lower income taxes. Thus, there should be equal taxes for all industries, so that no one industry gets burdened.
Here are some of my views about taxes, and how they should be. I am by no means, an Economic Expert, nor do I have access to all the numbers needed to make an informed, accurate decision on taxes. But I'm certain of one thing. The current system needs to be overhauled. I hope this article and its comments serve as a discussion ground for a future legislation for Fair Taxes.
(All numbers below are just indicative of the direction we should be going in and are by no means accurate)
~ Income Tax should be minimalistic, a fixed 5% or Lesser for all Industries. This way, the normal person gets more of his hard earned money in his pockets and can spend more, this will help the economy and will also help in getting more revenues through VAT. Owners of businesses will have more money to increase wages, increase quality and productivity.
~ You must be thinking now, everyone likes low taxes, but how is the country supposed to run with so less money? The revenue lost because of low income taxes, should be compenstated by higher VAT (and import taxes, if nescessary). There should be an across the board increase in Sales Tax (VAT) to a suitable level.
~ In a perfect world, I'd prefer a Progressive Taxing system, (In a perfect world I'd rather not pay taxes😁
whereby the higher you earn, the more taxes you would have to pay. For example, if you earned
$0-5 --> 2%
$5-10-->5%
$10-20-->10% and so on...
So that the Rich pay more taxes than the poor. But, eRep doesn't allow that yet (I believe). We can only have a fixed percentage of tax.
~ So, I propose a Consumption Based Taxing System, where, Income Taxes would be minimal and equal for all, and taxes would mostly be paid through consumption that people do. A richer person would be more likely to spend more money, and thus he would pay more taxes through his VAT. A poorer person who buys just Q1 food everyday would not have to pay so much taxes. This system allows people to keep more of their paychecks (their hard earned money).
I request everyone to leave your comments on this Consumption Based Tax System (CBT) here. It's these discussions that eventually lead to huge changes. The media is the true essence of a Democracy.
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This resembles what the CLP is pushing. No income taxes (hurt competitiveness), low (10-15😵 import taxes (source of revenue) while keeping prices low for consumers and higher VAT, especially on discretionary items (weapons and gifts).
Please consider joining us.
Makes sense. Just remember that these 'taxes' are going to a nearly perfect government budgeting system, which is much more than we can say for real live governments. That accumulated gold is building our hospitals, defense systems and funding the CAF.
I do agree with your theme though, allowing the little guy to get ahead easier will allow for more consumption during the boomer phase and lessen the attrition of new players who are frustrated at the snail pace the game gives them in the first couple weeks.
our gov't needs money.
@James Haskanyne, Yonsil: I totally agree, but I feel that the source of tax revenue should be Sales Tax, rather than Income Tax. This would help poorer, less fotunate ppl.
Income Taxes are needed, especially since the French War back a few months ago, where we found ourselves low on money and gold. Also we have expenses, such as the CAF, and trying to get a Health Care system working.
These things cost alot, and as such services like this require money. Which Income Taxes come into effect. However I think that they should be 5% or less, max 10% in times of need. Otherwise I think VATs should be the order of the day.
Sales tax are as only good as they get. If we are to have healthy tax revenue, we'd have to have people spending mad to match the revenues from tax income. Especially during the war like Derakor said. There is no consumerism during war. its the government that's the greatest consumer and they don't pay taxes (yes, its blasphemy lol).
I do not propose that Income taxes should be eliminated totally, they should be very less and should be increased in times of emergency by the Prime Minister's Executive order.
@Yonsil: I agree income should be taxed, but this should be done progressively as I indicated in my artice, so that lesser burden is placed on poorer people. However, the game mechanics don't permit us to do so at present.
You gave clear explanation of how the current tax system seems imbalanced and how a Progressive Taxing System would better balance the tax burden. I'd recommend ending it there and coming back with a new issue of The Sensible Voice where Consumption Based Taxed System is provided an equal amount of explanation. Right now I think CBTS sounds right but I don't yet see how it would be implemented. Great ideas. I want to know more.
We shouldn't be involved in conquest wars. Canada has everything we need right now (we can import cheap iron).
Ontario could use a Q5 hospital in case of war, but that's it.
The problem with only VAT tax is the disincentive to consume at higher levels. There needs to be an incentive to get up to the higher echelons, and take the risks of starting companies in order to ensure a diversified and rich populous in eRep.
For example, if you have a country charging tons for your consumables, and a country that has a better tax system for the rich, then the rich will float to the non VAT tax system country. This partially explains why in real live USA is such a draw for business men and professionals.
@James, that's a negative aspect of CBTS that you have pointed out. Thanks.
In politics, you sound like a hero when you have a taxation system supporting the poor rather than the rich.
You guys should check out the eUS debate on taxes (it's on our forum). We decided that a system based around the income tax better met our needs.
Makes sense except that income taxes for some industries should be higher to discourage people from working in them. Not really the case for food, but for raw mat industries where the country isn't productive.
We need to be involved in wars in order to get our soldiers experience. You don't want privates defending the country if there's an invasion.
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@SensibleVoices
Your right in real life. But as the boomer demographic bump becomes more wealthy overtime there is the possibility that most players in the game will be rich not poor. This is because the game is geared for success overall, as long as you stick with it poverty is something you can soon escape.
Therefore I suggest that your VAT tax system could hold real merits now, it would become increasingly uncompetitive as this new wave of users move up the ranks of wealth, providing that the base growth of eRep does not continue to grow faster than the attrition of its upper levels.
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We'd all love progressive taxes. Talk to the admin. I would love to agree with you, but I was emailed twice to comment. Extremely annoying. Your ideas are nice, but run for congress, get in, and then notice your countries budget. If you can find a way to pay for all that shit...let us know. We would really like a solution. >_
In regards to uniformity of income taxes at what not, yes its unfair but it is the main lever by which I can nudge the market in the direction we want. In the long yes the market would correct itself but not before some very unfunness. So there is a reason why some areas have lower or higher incomes taxes.
As for lowering taxes on the whole, great but we will have to cut back on the military which may sound like a good idea but war is arguably the funniest part of the game and an effectively military is essential in today's political climate. Historically Canadian taxes has been 1 or 2% VAT taxes and 99% imports which worked only when the currency was insanely valuable (by today's standards) Starting in December that began to change, and now Canada enjoys low imports (by international standards the US with hits 10,000 people has lower) a strong currency, relatively low prices in most goods (moving tickets and iron are the exceptions).
In return, we have normal or slightly high income and VAT taxes on most goods. In other words the current set of taxes is the middle ground between providing for the common defense (and common fun) and keeping money in people's pockets.
One must also consider the role of taxes in keeping check on inflation.
Why? Just tell me exactly what it is the government has done to have the right to take from our pockets. First, they want to orde us around, then if that wasn't enough, they want us to risk our very lives for them while they sit in some sort of fortress on their 100 wellness bottoms far from any danger. Now they want the money that WE, WE the citizen, WE the worker bee, We, the people worked so hard to earn?! That is an outrage! They already have Q4 houses! What more could they possible want?! Why should we give our money to them? Because they tell us what to do? NO! They should be forced to work and toil just like the rest of us. They are no better than we are. They shouldn't have to reach into our pockets. Isn't a government supposed to be honet? Responsible? Instead, we have to settle for "honest" and "responsible". Here's some advice; Don't steal, the government hates competition.
@Bullet Proof Fish, What exactly do u mean? The government runs on people's money, especially in a democracy.
@Rearden: I still can't fathom why income taxes are not uniform across the board? You agree that it's unfair, what do you mean by "nudge the market in the direction we want."??
@All: I think there has to be some reforms in this direction from the Admins themselves, so that we can have progressive income taxes.
Also, there should be seperate taxing mechanisms for Companies and People and not one common "income tax".
Till any further improvements from the Admins are made, I still think that CBTS is the best bet for now.
no taxes=bad
minimal taxes=more spending money for consumer, better economy, good
too much tax=government overflowed with money to waste, people struggling to save money