[Elite] Let's Talk Finances

Day 3,080, 13:02 Published in Ireland Ireland by Elite C

Hey eIreland,

As the title suggests, I'm going to be talking about finances, and in particular how I would prefer to see our taxes set and why!

So many people will say taxes and tax policies are irrelevant to everyday elife. However these are an important part of government.

We worry about the effects of taxes because:
1) They generally have effects that reduce economic activity: production as well as trade.
2) They have redistributional consequences (some players are hurt more than others).


To maximize total damage output, what we have to do is:
1) Adjust taxes so that we decrease economic activity the least
2) Adjust taxes so that the active players that hit more are taxed less, and inactive players that hit less / hit in irrelevant battles are taxed more.


The tax that can be exploited by government the most is Work Tax. No matter what the Work Tax rate is, people will continue to work just as much as they did before either daily as an employee or in their own companies. As a consequence, the government can increase the Work Tax without hurting production or labour supply at all.

Work tax does not retard economic activity, but VAT and Import Taxes do. Work Tax should be set to 5%.
*In the unedited version I had maximised Work Tax. This was due to my own oversight on the fact that Work Tax is charged per company you work in and I overlooked this in my earlier plan.

Import Taxes hurt the consumers of weapons and food proportional to their consumption. If you buy more weapons and food than the other guy, you lose more because of the import taxes than him. Hence high Import Taxes hit the high-hitters the most. Hence high import taxes reduce the total damage output.

Import Taxes should therefore be set low to approximately 5%

VAT hurts the consumers of weapons and food as mentioned above. However, they also hurt the producers of food and weapons, who sell their excess production. The people who sell their excess production are generally the middle-aged and old players – and they are exactly those players who have higher damage output per hit. Both of the effects are in the same direction – they reduce total damage output of the country severely.

VAT should be set at 1% for Houses and 5% for the rest.

Work Taxes are paid by only those who work at the market wage.
-The commune members aren’t affected at all. (Most active soldiers in the game fall into this category)

-The only players that are affected are the inactive “work-train-fight” people.

In addition, the wage income constitutes an extremely small portion of the total income of the average player nowadays. Most middle-aged players earn more from their companies than their labour income. So even if they are inactive/lazy, the middle-aged and old players would benefit from a taxation scheme that reduces VAT but increases Work Taxes to compensate for it.

Who is hurt the most? The inactive young players that don’t have enough firms yet. And do you know what, that is why government should run programs for these players so that they can get to the point where they are not negatively affected by these tax changes. The only losers would be the inactive young players – i.e. those who are the most prone to leave the game anyway. As argued above, the high-hitters all benefit from such taxes.

So to summarise:

House VAT: 1%
Remaining VATS: 5%
Import taxes: 5%
Work Tax: 25%


Big thanks to Kemal Ergenekon for his help and advice! A fine economist I must say.

All the Best,
Elite C