[Kemal Ergenekon] Tax Base of Countries

Day 3,171, 11:10 Published in USA USA by Kemal Ergenekon


Sup,

I was bored, so I wanted to do a comparison of the tax bases of different countries. Tax base is different from tax revenue. Tax revenue gives you how much money you are currently earning. Tax base gives you how much money your economy can generate independent of the tax rate. A country with a larger tax base can generate the same revenue with a lower tax rate. This is important for countries which want to lower the economic burden on their citizens.

So, how did I calculate this? I made several assumptions. For tax revenue, I took the maximum revenue in the past week. Then I made the heroic assumption that all tax revenue derives from work tax (as opposed to VAT, Import, etc). However, this is not so crucial, since (1) the majority of tax income comes from work as manager clicks and the associated work tax anyway (2) as long as the share of VAT and IT revenue for countries in their revenues is roughly the same, we would get the same ranking anyway.

After these assumptions, tax base is simply calculated by dividing the tax revenue by the work tax per click for each country (which depends on their WT rate and average wage). There are of course many complications like countries that are invaded, changes in average tax rate through the week etc. I didn't take these into account.

Here are the results:



You can see the Work Tax Per Click, Tax Revenue and Tax base of the countries I selected. The next 3 columns show the rank. For WT per click, a higher rank is better, because you want the tax burden per click to be low. For tax revenue, a lower rank is better, because you want your revenue to be high. This is similar for tax base.

The top five in terms of tax base are Serbia, Poland, Romania, the US and FYROM. However, in terms of tax revenue, US and FYROM go down to 7 and 11 respectively. That means the US and FYROM have a very low tax burden, and if they increased their taxes to levels comparable to Serbia, Poland and Romania, they would nearly make the same amount of money.

Countries whose tax revenue rank exceed their tax base rank have high taxes. Countries whose tax revenue rank are below their tax base rank have low taxes.

That's all.

Kemal