An Idea: How to make Income Tax work
Day 1,205, 14:17
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Published in Canada 
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by
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by Dean22
Two years ago Prime Minister Jacobi needed help to fix the economy. I told him it was simple. Control the flow of currency and kill the VAT tax. Profit off of currency sales. So I sold the idea to congress and congress liked it.
With Alexander Rearden no longer able to influence people towards VAT tax and his poor economics out of the way, Jacobi became one of the most successful economic Prime Ministers ever.
In his first term eCanada had 1505 active eCanadians.
The tax income with low import taxes, no vat tax and a 15% income tax for his first month was:
$257,145 CAD (Tax revenue and assuming from my memory that I remember we had at least $70,000 CAD left in the treasury at the end of the month)
The Average eCanadian wage back then for our 1505 citizens was $5.
The amount of money Jacobi issued is:
$90,000
The amount of gold that Jacobi ended up with after his first month in office due to income tax was:
8485.78 Gold
This was particularily due to Canada's high dollar and most of this CAD save $70,000 was turned into gold due to Moffington selling at the correct times.
You can find this information in admin from pages 77-83.
Let's take a look at today? Today, we have working managers who don't pay Income tax or VAT tax. How many active citizens does eCanada have today?
According to some erep tool sites and accessing eCanada's economic page coding we can find that eCanada has 2100 active eCanadians that work (very surprising).
The average wage in eCanada is currently $14.
Income tax is low, VAT tax is high and import taxes are almost non-existant.
eCanada's issued money for this last month was $0.
eCanada's income from it's citizens this month was $882,000 CAD.
eCanada ended up with approximately $240,000 CAD this last month valued at 2400 gold in market liquidity.
This means eCanada ended up with approximately 27.2% of the money made in eCanada by it's citizens. However, that's impossible with VAT since it matters on purchases.
How much money did the CAF use for the month? Around $50,000 CAD. Now we shall assume 20% of this went to the same treasury since its tax dollars being taxed (how smart am I right?
So approximately $10,000 CAD was "made up" and wasn't really tax revenue it was the government paying it's own taxes. Where does that leave us?
That leaves us with approximately 5% of the eCanada revenue came from businesses and import taxes.
Our import's are valued at approximately 600g as of 30 days ago. This means approximately 120g or $12,000 CAD was from import taxes.
This ultimately means that $32,100 CAD or 13% of the tax revenue came from businesses. eCanadian businesses this last month produced approximately $952,000 CAD worth of goods.
That means with the current VAT tax approximately 3% of corporate taxes went towards eCanada this last month.
Now, what if a 20% income tax had been applied to this last month what would it be like then with no VAT tax with a higher import tax of 50% on most sectors?
1) CAF wouldn't pay taxes first of all so thats out the window
Firstly, eCanada would earn $176,400 CAD from it's citizens.
Secondly, that means that 300g or $30,000 CAD comes from import taxes.
Thirdly, less than 3% of the money companies earned went to tax revenue last month. With an Income Tax it could potentially go up to $190,400
That means approximately $396,800 CAD almost double the tax income that Addy Lawrence's low import (because the free market works in a game where everyone has the same product amirite lawls) and high vat tax system.
TLDR
Jacobi's government 2 years ago made 8485.78 Gold with income taxes
Addy Lawrence VAT taxes last month made 2300 Gold (if you could even sell it in this volatile currency market) with low import tax and high VAT tax
eCanadians can afford half as much as they could a few months ago.
But wait Dean22 where's the idea?
The whole point of this article is this:
No it's not a bashing thread or mathematic proof that Addy Lawrence is once against bad and wrong at economics.
It's to propose something for people to talk about.
Income Tax Refund
Right now, (until two months from now which, is the proposed dead line for admins to fix monetary market so companies can't cheat income taxes) any company in eRepublik can avoid income tax.
My proposal is to do an Income Tax Refund. If a citizen or company records his income taxes via screenshots he can be entitled up to 50% of it back.
Even if we lost out on 50% of corporate income tax we would still be up by 50% in tax revenue.
This gives incentive for not only citizens but also companies that can be rewarded for paying income tax. If I had the choice between paying 20% corporate tax and getting 10% back later or just cheating eCanada out of it's taxes I would gladly do the tax refund.
This is something that would be fun for citizens as they can see a pay cheque for their hard work in eCanada rather than the only way to see your hard paid dollars to the government is by joining the army as Jacobi said in his article.
Think once, think twice and now think thrice before you comment.
Even if no one likes this idea you won't be able to cheat income tax in two months anyways. Why not move towards Income Tax, with better import taxes to protect the economy of eCanada and make MORE CAD rather than punishing the citizens of eCanada with ridiculous consumer prices that cause inflation of products to go up. You can avoid VAT tax but soon you won't be able to avoid Income Tax at all.
Let's change our taxes to show the eWorld that we are not stupid and that we don't believe in a ridiculous free market system that will NEVER WORK in a game where every country has the same products.
With Alexander Rearden no longer able to influence people towards VAT tax and his poor economics out of the way, Jacobi became one of the most successful economic Prime Ministers ever.
In his first term eCanada had 1505 active eCanadians.
The tax income with low import taxes, no vat tax and a 15% income tax for his first month was:
$257,145 CAD (Tax revenue and assuming from my memory that I remember we had at least $70,000 CAD left in the treasury at the end of the month)
The Average eCanadian wage back then for our 1505 citizens was $5.
The amount of money Jacobi issued is:
$90,000
The amount of gold that Jacobi ended up with after his first month in office due to income tax was:
8485.78 Gold
This was particularily due to Canada's high dollar and most of this CAD save $70,000 was turned into gold due to Moffington selling at the correct times.
You can find this information in admin from pages 77-83.
Let's take a look at today? Today, we have working managers who don't pay Income tax or VAT tax. How many active citizens does eCanada have today?
According to some erep tool sites and accessing eCanada's economic page coding we can find that eCanada has 2100 active eCanadians that work (very surprising).
The average wage in eCanada is currently $14.
Income tax is low, VAT tax is high and import taxes are almost non-existant.
eCanada's issued money for this last month was $0.
eCanada's income from it's citizens this month was $882,000 CAD.
eCanada ended up with approximately $240,000 CAD this last month valued at 2400 gold in market liquidity.
This means eCanada ended up with approximately 27.2% of the money made in eCanada by it's citizens. However, that's impossible with VAT since it matters on purchases.
How much money did the CAF use for the month? Around $50,000 CAD. Now we shall assume 20% of this went to the same treasury since its tax dollars being taxed (how smart am I right?
😆
So approximately $10,000 CAD was "made up" and wasn't really tax revenue it was the government paying it's own taxes. Where does that leave us?
That leaves us with approximately 5% of the eCanada revenue came from businesses and import taxes.
Our import's are valued at approximately 600g as of 30 days ago. This means approximately 120g or $12,000 CAD was from import taxes.
This ultimately means that $32,100 CAD or 13% of the tax revenue came from businesses. eCanadian businesses this last month produced approximately $952,000 CAD worth of goods.
That means with the current VAT tax approximately 3% of corporate taxes went towards eCanada this last month.
Now, what if a 20% income tax had been applied to this last month what would it be like then with no VAT tax with a higher import tax of 50% on most sectors?
1) CAF wouldn't pay taxes first of all so thats out the window
Firstly, eCanada would earn $176,400 CAD from it's citizens.
Secondly, that means that 300g or $30,000 CAD comes from import taxes.
Thirdly, less than 3% of the money companies earned went to tax revenue last month. With an Income Tax it could potentially go up to $190,400
That means approximately $396,800 CAD almost double the tax income that Addy Lawrence's low import (because the free market works in a game where everyone has the same product amirite lawls) and high vat tax system.
TLDR
Jacobi's government 2 years ago made 8485.78 Gold with income taxes
Addy Lawrence VAT taxes last month made 2300 Gold (if you could even sell it in this volatile currency market) with low import tax and high VAT tax
eCanadians can afford half as much as they could a few months ago.
But wait Dean22 where's the idea?
The whole point of this article is this:
No it's not a bashing thread or mathematic proof that Addy Lawrence is once against bad and wrong at economics.
It's to propose something for people to talk about.
Income Tax Refund
Right now, (until two months from now which, is the proposed dead line for admins to fix monetary market so companies can't cheat income taxes) any company in eRepublik can avoid income tax.
My proposal is to do an Income Tax Refund. If a citizen or company records his income taxes via screenshots he can be entitled up to 50% of it back.
Even if we lost out on 50% of corporate income tax we would still be up by 50% in tax revenue.
This gives incentive for not only citizens but also companies that can be rewarded for paying income tax. If I had the choice between paying 20% corporate tax and getting 10% back later or just cheating eCanada out of it's taxes I would gladly do the tax refund.
This is something that would be fun for citizens as they can see a pay cheque for their hard work in eCanada rather than the only way to see your hard paid dollars to the government is by joining the army as Jacobi said in his article.
Think once, think twice and now think thrice before you comment.
Even if no one likes this idea you won't be able to cheat income tax in two months anyways. Why not move towards Income Tax, with better import taxes to protect the economy of eCanada and make MORE CAD rather than punishing the citizens of eCanada with ridiculous consumer prices that cause inflation of products to go up. You can avoid VAT tax but soon you won't be able to avoid Income Tax at all.
Let's change our taxes to show the eWorld that we are not stupid and that we don't believe in a ridiculous free market system that will NEVER WORK in a game where every country has the same products.
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Screenshots can be photoshopped
Income tax refunds are a interesting idea at base. However, I wouldn't trust people with screenshots. For sure there would be edited screenies to take advantage. Perhaps some other method can be devised, like an eRep T4 slip that Admins PM to us at the end of the tax year.
i wonder how we avoid vat tax, without selling at 0.01
Plugson's idea is dependent upon the line of thought that admins aren't complete idiots and is therefore invalid.
A few things,
First off, I am all for having a discussion looking at adjusting the tax balance, I don't think VAT taxes have had their predicted effect.
But I have some concerns on your analysis.
If tax revenue was 257145, and we were income centric would it not be a fair estimate to say at least 70% of tax revenue came from income taxes? So we generated 180K in income tax revenue in that month.
By that reasoning, the average eCanadian paid 119.6CAD (180K/1505) in taxes that month. With income taxes at 15%, the average Canadian made about 800CAD a month in wages, or 26CAD a day.
If we use the mean wage you provided, the total wages of eCanada for that month would be 225750CAD (1505*5*30). With a 15% income tax that is income tax revenue of 33862.5.
Something doesn't quite add up.
Furthermore, if you adjust that 257145 into gold terms today, you get 2571gold (give or take a bit on the day). Not a massive difference from the 2300gold number you use here.
Using budget projections, there will be 176,400 CAD in tax revenue this month. Roughly tax revenue will be 68% of that in the month you reference.
Dominik it was also dependent on the line of thought that mine was a silly line of thought.
@Alexander Rearden
Yes, your correct. My proposal ends up in lowering the eCanadian citizen's money paid to the government but INCREASING the amount of money paid by corporate.
It increases tax revenue by 100% if no tax refund was done.
Dean22 is an evil socialist. Why do you hate Canada, Dean? Why do you hate freedom?
Wait what?
My point was your data didn't add up right.
In the first month you used for comparison. Wages could not possibly have been on average 5 or your tax number is off.
If your tax revenue number isn't off, then the average salary was 26CAD or higher depending on what percentage of tax revenue was from income taxes in your initial post. Since I assumed 70% of tax revenues came from citizens wages being taxed. The rest being corporate income taxes and imports tax revenue.
Go back to the nursing home, old man
trollolololololol
"Even if no one likes this idea you won't be able to cheat income tax in two months anyways."
Has this actually been talked about by Admin? Because I would really like to see it happen. I don't understand how such a large loophole could have existed for so long.
eRep has fundamentally changed. I would hypothesize that the average citizen works 10 times a day and only one of those clicks is for a wage. Even if income tax was maxed out at 25% (which I believe is the new max) the effective taxation of labour would be 25% divided by 10 clicks or 2.5%, consider that the "value" of the work click is best approximated by the market wage paid by that click. Those nine worker manager clicks are "lost", absolute income tax evasion.
The only way to recover that income tax evasion is through VAT. The output of those work clicks needs to be sold. If that output is sold at $0.01 per unit, then VAT is evaded too.
At the end of the day, VAT is generating more tax revenue for the government TODAY than the income tax approach was ONE MONTH AGO and that is a relevant comparison as opposed to a time where the economic environment in the game was completely different.
Here is the chart:
http://www.erep.cc/data/countries/23
Notice that the lines are steeper in the most recent observations as opposed to the dated ones.
Only thing I notice is that if Admins remove the ability for companies to use the Money Market, then when profits are collected from the company and transferred to the citizen, they will be subject to whatever tax rate the income tax is set at...
ie: if I have 1000 CAD in my grain company produced from worker/manager and want it in my citizen, and the income tax rate is 20%, 200 CAD would be collected at that time..
@Addy
1) Moot point with Income Tax change by admins
2) Your saying 20% VAT tax collects more tax than 10% Income Tax?
DURRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRR
Sorry, can you say that again once more for the microphone? That was some brilliant mathematics.
The income tax/MM changes...yes, it would force you to pay whatever the tax rate is...and if you have a ton of CAD and want to upgrade a company, you will now need to transfer the money out, and then buy Gold. During the transfer to Gold, your funds will be taxed, even though it is technically an investment into the company rather than actual income being taken out of it.
Best option to pay lower tax - consume what you make by selling to yourself at 0.01 CAD to maintain a low cashflow. It makes perfect sense for admins to close off the money market loophole. I suppose paying tax even when upgrading companies is a small price to pay in order to make everyone decent tax paying citizens.
Dean, you never adressed the problems in your own math.
One, or more, of these things are wrong.
Population, Mean Wage, Tax Revenue.
If tax revenue and population are correct than the mean wage was ~26, if mean wage and tax revenue are correct than the population was ~8000, if mean wage and population info was correct than the tax revenue from income taxes would only have been ~34000.
Dean, wouldn't it be wiser to advocate for an income tax change when/if the Admin's actual change their policy?
Until that point, I don't see how they could remove more CAD from circulation than VAT.
Also, do you have a link to a forum thread, or any concrete evidence where admin talks about this change?
Your tl;dr doesn't add up with your article.
"Jacobi's government 2 years ago made 8485.78 Gold with income taxes"
It is simply not true. As you said in your article Jacobi made a print run and that is where the high revenue was coming from (due to the high CAD). There hasn't been any CAD printing recently because the admins do that job for us.