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The Economist ~ On the ill advised tax hike

Day 2,376, 10:53 by Iain Keers



Dear friends.


Why oh why did you listen to jamesw. I’m going to start about talking about the specific situation in the eUK, but if you want my more general opinion on tax, skip to the second half (after the picture). To those of you who are interested, a proposal launched yesterday increased the work tax burden in the UK from 1% to 3%, and tried to similarly raise the weapons VAT tax.


Allegedly this was done based on an argument made by jamesw, who has spent his retirement moralfagging all over the place on any issue he can, that “the 1%” should pay more tax. He pointed out that tax disproportionately affects the poor, and that whilst a rich man like him might only pay maybe a percent or two of his income each month, a poor player with a few companies pays a greater proportion of tax. His logic was shaky at best, and the changes don’t actually benefit poor people, but he pushed it through anyway.


The worst part about this insanity is that the logic behind it was non-existent. He didn’t propose to raise tax to pay for more MPPs or a new program. It’s just raising tax for the sake of it. The extra money won’t benefit us at all, we already have over 1m cc in the treasury for emergencies, and we made enough tax to pay all our MPPs.


What’s more, the cost of CO and other “super” expenses like supplying MUs is beyond our ability to fund no matter what we set taxes. For that we rely on that 1% of the population to pay for it out of their pockets. His argument was that he made 600g a month, and took most of it home as profit. Well a marginal increase in tax is one thing, but most of the super rich spend their cash on the UK directly each month, meaning their contribution is massively greater than the tax they pay.


Finally the arguments for 1% tax haven’t changed. The world is a volatile place sure, but foreign markets are still more desirable to build in. If we do have a slight advantage now because of our stability, we should be using that advantage not crushing it by raising taxes and pricing ourselves out of the market. Our lower wages, rock bottom taxes and decent bonuses actually make us attractive. Well, they did.


This congress has been full of durp in a number of ways this term. I’m not going to waste my breath appealing to them to lower the tax again, but I hope the next congress will see that raising taxes isn’t a moral imperative, but something which must be directly tied to an increase in the need for money. It’s not about role playing your real life fantasies about “the 1%” or about socialism, it’s about the realities of the game. In the eUK, we don’t need higher taxes, and low taxes give us a competitive edge.




On a more general level, I’ve always supported taxes to fit the country. If you’ve got 10/10 bonuses and a huge player base, higher taxes make sense. You already have the best “product” on the market, and as a big country you rely on tax income not player donations to keep your bonuses. The effective cost of a tax increase is markedly lower than the cost of bonus loss, as Kemal explains here.


Should Poland and so on all raise their taxes to reflect this then? No. Like I said in the first part of the article, tax should be based on capacity and need not on the desire to have a nice round figure. If you are making (for example) 300k cc a month in taxes, and spending 250k cc, you can consider a tax cut. If you’re making 300k cc and spending 400k cc, consider raising taxes. It sounds pretty damn obvious, but you’d be surprised how many people don’t even consider the budget before they start voting on tax.

Another argument I always hear is the “rainy day” tax. A lot of countries talk about saving money by having a tax surplus against some future need. That’s a good idea in some ways, but you need to analyse how much your country makes- it’s disposable income. If you have say 20 MPPs a month, and you make 1 million cc from 3% tax, then your “disposable” income is 800k cc, which you can spend on whatever you want. If you don’t have any wars that month, you get 800k cc richer. If you do, you might end up having a deficit.


However in a situation like the UK, which has maybe 12 MPPs and makes 120kcc a month, you have to question the logic of raising tax. If we raised our work tax to 3% we would make more tax money. Maybe enough to pay for CO for a day or two, or supply a small MU for a week. The benefit really isn’t there. In most cases the expensive part of war is paid for by the citizen not the government- a result of game changes.


Finally, there is the ever present danger of theft. How many millions worldwide have been lost by countries because after 11 good CPs the twelfth is a thief and runs off with it. Carefully hoarding 80k cc a month until after a year you have a nice 1m cc buffer, only for it to be stolen, is depressing stuff. Best to keep the buffer as small as reasonably possible, and in the treasury until it’s absolutely needed.


tl;dr, lower taxes.


Iain





Ps. someone will inevitably say “oh Iain you would say that, since you are rich”. Just for the record, if I lived in the UK for the next year I’d pay something on the lines of 75k cc in tax. The UK national debt to me is three times as big as that, and I’ve funded at least half a million cc in CO in the last six months. It’s not about me, it’s about the UK.


* Kemal's article simply won't link. If I put the link in, my article won't publish. Admins absolutely suck.
 

Comments

Ayame Crocodile
Ayame Crocodile Day 2,376, 11:15

Actually agree with you here.

If Jamesw's point was that those with more should be altruistic and give more to the state for COs, Then by all means use the donate function and send cash to the MoD org, There is no reason to raise the tax for everyone.

And without clear ideas on where the extra revenue could be used, there is no purpose in raising the taxes when we're already operating (albeit only slightly) with a surplus.

Malkaiser
Malkaiser Day 2,376, 12:09

TUP have had 12-13 Congressmen every month and didn't change the current system which allowed this change to happen without enough public discussion.

I'm assuming TUP are not total sociopaths and can reach a few more Congressmen to get enough votes?

Madelina de Melrose
Madelina de Melrose Day 2,376, 17:01

Um... hello.... those 12-13 congresspersons (I was one) are able to vote for or against. What system? It all is based on someone proposing something - and I'll admit my first proposal in Congress was idiotic, due to lack of information over the past years I've been playing - and the Congressional body voting for or against it (they had enough sense to vote against my proposal!). It's not a system that can be changed... unless, of course, you're advocating for a dictatorship?

Malkaiser
Malkaiser Day 2,377, 01:29

Oh well your boss Iain is the one asking for change.

Ser Fartsalot
Ser Fartsalot Day 2,376, 11:16

Good job. Instead of losing 1% of their salary, the workers will lose 3% of their salary.

WayneKerr
WayneKerr Day 2,376, 11:18

I voted noto all of em, as I'd rather the player directly kept the money he has , but theres no harm in having a look at what they do. People can always change em back.

BigAnt
BigAnt Day 2,376, 17:02

why would anyone listen to an inactive fag like james?

Neil Lewis
Neil Lewis Day 2,376, 17:07

snap, plus i argued against it before mwc added his amendment & it went to a vote on the PM thread; no-one seemed to back me up against his ridiculous proposals

Ayame Crocodile
Ayame Crocodile Day 2,377, 03:40

I would've but as far as I can tell Congress want the executive to leave congress matters alone entirely.

Otherwise I would've voiced my opinion on it.

The Mike
The Mike Day 2,376, 11:22

http://www.erepublik.com/en/article/2400863/1/20

Initially, it wouldn't let me link Kemal's article neither, but it worked after I removed the text from the link (:


If one isn't deficit spending (spending more than they earn over a specified time period), there is truly no point in raising taxes : )

Ser Fartsalot
Ser Fartsalot Day 2,376, 11:30

jamesw has no basic math skills? What is this?

Lord Farhan
Lord Farhan Day 2,376, 11:47

This is what happens when I leave congress for 2 months, people start all sort of stupid laws.

You may call me V
You may call me V Day 2,376, 11:49

I wrote to james to explain himself better no reply so I voted no!

MaryamQ
MaryamQ Day 2,376, 11:57

If you want to make the rich pay more, raising what is essentially a flat tax that cannot be tiered by game mechanics is a poor way to do it. The higher percentage hurts small players far more than rich ones. Really, what are people thinking?

nW0lf
nW0lf Day 2,376, 12:18

People that don't understand basic game mechanics are applying stupid RL ideologies and ruining the game for everyone else? Tell me the news plox.

I mean, really, it's not a "benefit" of the UK to have those players. Guess it happens everywhere and there really isn't a good way to stop it...

Alan2210
Alan2210 Day 2,376, 12:49

Can't company owners lower the salary they pay their workers and make up the balance in weapons so they avoid some of the work tax and as they have less weapons to sell they avoid some of the vat increase.

Kemal Ergenekon
Kemal Ergenekon Day 2,376, 12:53

I agree with this article. For large countries, high taxes makes sense. For medium and small countries it doesn't make much sense because of the lack of a sufficiently large population base. That's why I advise Cyprus to have low taxes just enough to cover the MPPs (sometimes not even that).

Massacar
Massacar Day 2,376, 13:13

Good article. I agree with you (not that my opinion particularly matters to you) on all the points.

Mr Woldy
Mr Woldy Day 2,376, 13:36

yup

CptChazbeard
CptChazbeard Day 2,376, 13:49

Is it not perhaps possible to wait and see in practice what effect such changes would actually have (over a period of more than a day or two at least) and revert them back if negative?

Iain Keers
Iain Keers Day 2,376, 15:32

The effect will be: more money will go into the treasury. The effect of the change isn't in doubt- the reason for it is. Namely, nobody has been able to name a reason for doing it so far, other than because they can and to "see what happens". Totally stupid.

CptChazbeard
CptChazbeard Day 2,376, 15:42

It's for the Chazbeard Yoof. What other reason is needed?

djnewdream
djnewdream Day 2,376, 14:07

Raising work tax for more income is just senseless, because the effect (more income) wont fit the costs (loss of income for all, esp. newbies). Besides it doesnt make sense to raise work tax while having no need for more income (huehue, Hoeneß approved), Iain also wrote that the MPP-Stack can be paid easily with the current taxation. So its quite a senseless act of pure power play. I totaly agree with Iain.

Rob the Bruce
Rob the Bruce Day 2,376, 14:30

"Finally, there is the ever present danger of theft."

The danger is always there Iain, more money sat there doesn't make much difference, theif's gonna theif whether they have a lot to steal or a measly sum.

My line of thinking is that when somebody steals the treasury (which seems to be becoming a more common occurence) the cash can build up again a bit faster. Also it gives us more money to mess around with so if we come up with something useful the idea won't get shot down by people going "costs too much"

It's easy enough to change back if we wind up bankrupting people, and I'd rather see what happens first rather than just going "oh no congress dun goofed" without actually seeing the results first.

Iain Keers
Iain Keers Day 2,376, 15:30

What results? There's no point raising taxes if you have nothing to spend it on. The results will be "we will have marginally more money in the treasury". Maybe a few thousand cc more a day. It's still nothing compared to what we spend on CO, and the only result you'll have is zero private military support whilst taxes are high.

Rob the Bruce
Rob the Bruce Day 2,377, 03:15

The extra income could provide more oppurtunities for us to support players, depending on how much more we make. Which is why I want to see the results seeing how much me make compared to how many people go mental and bankrupt to see if it's worthwhile.

Iain Keers
Iain Keers Day 2,377, 03:30

Yet you voted to raise them without actually saying it what way the extra tax would help? It makes no sense.

Rob the Bruce
Rob the Bruce Day 2,377, 16:02

Let's do some maths Iain, maths is fun

Let's use your numbers, say we make an extra few thousand cc a day, 2k for example. Over 5 days you've earned yourself an extra MPP, so over 20 days you've got yourself 4. Wahey more damage for UK, more battles for us to earn BH medals in, and the public is still making a profit seeing as wages are usually around 20cc or something around that, and my work tax today came to about 5cc. New players aren't going to have as many companies to pay for as I do, they'll get paid similar wages.

I haven't been able to comment on how the extra money would help until a good result comes in later, by shooting the idea down this early it's impossible to tell how much we can do, be it more MPPs or maybe a small expansion on the loans we give out, hell maybe give it to the NHS, can't say till we see how much extra we're making. It might not be worth it, in which case it can be lowered again. What's the harm in at least having a look?

Iain Keers
Iain Keers Day 2,377, 16:14

Which four MPPs. You don't understand a damned thing about foreign affairs do you? Our MPP stack isn't determined by how much money we have and neither is our damage in battle. Your maths is total bullshit, you couldn't even be bothered to check the job market for current wages.

A stupid change made by uneducated fools playing with tools they don't understand. It'll be swiftly undone tomorrow.

Tiamati
Tiamati Day 2,376, 15:17

Excellent Read as Always; here is a an article of mine with a similar vein.

http://www.erepublik.com/en/article/etaxation-machinations-and-resultant-implications-2329233/1/20

ArgoFookYourself
ArgoFookYourself Day 2,376, 15:59

The reason for raising it would be that for the last few months despite a fairly stable income we have run at a deficit before even looking past MPPs to CO's
A rise from 1% to 3% will cost an extra 0.6cc per company per day

This would allow us to balance our books and provide investment to newer players, be it 80% repayment TG loans... name what you want, what is a marginal change coupled with a reduction in foot VAT can't cause any real harm to citizens and increase our ability to cope with wars and finance.

Demonaire
Demonaire Day 2,376, 16:43

Lower taxes?

The eR economy module is destroyed thanks to the low taxes. It's needed a change.

-1

CrispyDragon
CrispyDragon Day 2,376, 16:54

Some valid, well formed points throughout. On the whole I do feel myself siding with you in reducing taxes. However, I can imagine some potential benefits a higher income to the treasury could provide.

As mentioned in the comments, new initiatives, or an expansion on existing ones, is an option. More generous Training Ground loans, or funding to the NHS, being the most obvious.

That being said, I believe a re-distribution of wealth to the point of direct investment in the most active citizens to speed up their economical development could be the most beneficial option. By that I mean pumping cash into citizens to buy Salts, or Rubbers, or whatever else is most profitable at the moment. Now I know one of your first responses will be that to even reach a break-even point, let alone the profit point, of such an investment will take an considerable amount of time, but despite that I still think it is a good move because it helps those that will benefit most develop faster.

A second, counterpoint I can imagine is the time it would take to convert the cash to gold, or vice-versa with the current limits on personal accounts. There are what, a couple dozen or so consistently active members of the UK? I mean people like Carlini who has only ever missed one day, or Kraven that's never missed any, I'm sure there must be more like them. People like this would be safe bets to invest in, because we know they're gonna be here long enough, and active enough, to see some fruition of such a long term investment.

To finish and to wrap up my whole reply I'll leave you with a simple thought. It is better to take £100 from a hundred new players and instead invest that into one long-term player, than to leave it with them and watch impotently as they become dead citizens. Regardless of if we never see a 'profit' from such an investment, a negative investment is infinitely better than letting money go to oblivion.

Madelina de Melrose
Madelina de Melrose Day 2,376, 17:02

Would love to say I agree wholeheartedly... but once again there is JARGON and ALPHABET SOUP in here that most eUK citizens won't understand.

SPELL THINGS OUT. Yes, it takes longer to type "military unit" than "MU" but

Madelina de Melrose
Madelina de Melrose Day 2,376, 17:03

stupid touchpad... I'll finish my comment here....

if we want an informed citizenry, we need to either provide a glossary or provide explanations. Not alphabet soup.

Bohemond4
Bohemond4 Day 2,376, 20:46

I like soup (:

Aquila Grant
Aquila Grant Day 2,376, 21:02

The ability to control 100% of one’s own earnings – spending as one sees fit – is a simple expression of liberty. Players in a browser game undoubtedly like to play that game because of the freedom of action the game environment provides. Any infringement upon those freedoms will be met with apprehension.

Successful governments, both IRL and in-game, are charged by the citizenry with the job of protecting the liberties of its citizens. Usually this means averting foreign threats, a large burden best met through the collective action of the citizens, generally via taxes or via direct involvement.

The work tax rate is a place where the balance between these opposing needs is arranged. The government cannot complete its charge without tax revenues and the citizens cannot have pure economic freedom by providing tax revenues. But ultimately good citizens recognize that they have a vested interest in the success of the government and so choose to pay taxes. In turn, good governments recognize their charge and work to minimize the tax burden.

At issue then is not whether one pays tax, but rather how much tax to pay. Iain directly addresses this issue by pointing out that there has not been a change in the status quo cost of protecting the liberties of eUK citizens. Indeed, prior to raising taxes, it is incumbent upon the government to present the case of how the cost of protecting the citizens has increased.

I am in agreement with Iain. I am not aware of any salient increases in the cost of protecting our citizens, consequently there is no need to increase taxes. Admins already restrict our economic freedom enough. The last thing we need to see is a group of players usurp even more of our freedom by choosing how to spend the money we make. I am playing this game because I get to choose how to spend what I make, not to let someone else choose for me.

Aquila Grant
Aquila Grant Day 2,376, 21:03

tl;dr version: Repeal the tax increase or build a consensus around a cogent reason for the increase.

Conan der Barbar
Conan der Barbar Day 2,376, 23:51

" It’s not about role playing your real life fantasies about 'the 1%' or about socialism, it’s about the realities of the game."
I would subscribe to this.

Thank you for the nice article.

Sweet Drinker
Sweet Drinker Day 2,377, 01:17

IT'S ALL JAMESW'S FAULT

Sir Winston S Churchill
Sir Winston S Churchill Day 2,377, 02:48

I put forward to change it back to 1% so far 11 votes yes 13 no.

Rob the Bruce
Rob the Bruce Day 2,377, 03:18

No point repealing a law after 1 day. Couldn't even see what difference it made if we did that

Mar Xist
Mar Xist Day 2,377, 04:19

Scaremongering at it's finest.

It's a test- I'm a new player and the tax increase isn't noticeable so to say it will hurt new players is tosh.Congress have been in discussions about grants as well as MPPs a slight tax increase will help towards these.

It's not the end of the world people, if the taxes don't work as well as planned they will be changed back.

Bohemond4
Bohemond4 Day 2,377, 04:23

Its not really scaremongering, Iain is presenting his opinion...

Iain Keers
Iain Keers Day 2,377, 05:25

OK everyone seems to have the same sort of comment so let me respond to everyone at once.

1. Congress had this discussion in threads which nobody could see or participate in. They didn't involve the public in their discussions, they are unaccountable.

2. There are no plans to increase spending at all. I know that directly from the government, in fact the CP posted about that, his was the first comment on this article.

3. Since there is no need to spend more money and no plans to do so, and we have almost 2 million currency in reserves, raising taxes is totally unnecessary.

In conclusion, congress raised taxes because of something that "might" happen, they didn't consult the actual tax payers about it and in short they didn't plan it at all - just did it and tried to justify it afterwards.

Yossarian Afudyakno
Yossarian Afudyakno Day 2,377, 06:25

The PM Congress discussions should be moved onto the forums for more security and more transparency.

Sir Winston S Churchill
Sir Winston S Churchill Day 2,377, 06:34

No wrong they should be moved to articles end the forums.

Yossarian Afudyakno
Yossarian Afudyakno Day 2,377, 06:43

Articles = really, really bad way to have a conversation, although good public scrutiny EXCEPT WHEN PEOPLE BUY VOTES

IRC = good way to have a conversation but temporary, encourages off-topic chat and depends on hours/meeting times

In-game PM = good way to have a conversation but big problem with accountability

Forums = best way to have a conversation, clearly listed chronological posts that stay in order and last permanently, and also possibility of READING without being able to write (= scrutiny), but not used enough

fm2008
fm2008 Day 2,377, 10:41

Dreadful idea why did you go ahead with it keers of you disagreed? If we don't need the money this is bonkers

James E Richardson
James E Richardson Day 2,378, 03:42

I'm a low level player, only making q2 food. Because I could only afford numerous small FRM buildings, it costs me £17 to work in my own places.

 
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