Economy

[RELee]

S
For people who want to keep things simple, Effective tax is really all that matters.

RELee raises his hand.

 

[Kriegsspieler]

See: http://forum.paradoxplaza.com/forum/showthread.php?t=489341&page=2 , the whole thread is good on this.

There a number of posts by King related to this. In one he states that the taxes "lost" by inefficent collection are not actually lost, they are never collected. This is WAD.

I think of the slider as "Given what we can collect, how much will we collect?"

I guess I am not making myself clear. You have convinced me that what you are claiming about the way that taxes are collected is correct. I'm saying that this is the wrong way to have it function.

Say the poor POPs have a total income of $100 and an efficiency of 20%. As things seem to work now, a setting of 100% only yields $20 because you are only collecting 20% of their income (and presumably a 50% tax setting would get you only 10%, if the function is linear).

The way things ought to work, however, is that a setting of 100% means you are extracting all of their income but only getting 20% of it for your use, because the other part of it is disappearing into "the system" somewhere.

In each case, you only get the same amount for your spending, but the consequences are quite different in game terms, because only in the second scenario you are actually draining the POPs of their ability to buy things they need. In the first scenario, you are barely scratching them. That's not the way things worked in the original, and, as I have said, it makes it impossible to tax the POPs at a high enough rate to get them pissed off,* which cannot have been what was intended.

*- EDIT: At least, it is impossible to do so at the beginning of the game. We don't know what happens later on - yet.

 

[RickInVA]

I guess I am not making myself clear. You have convinced me that what you are claiming about the way that taxes are collected is correct. I'm saying that this is the wrong way to have it function.

Say the poor POPs have a total income of $100 and an efficiency of 20%. As things seem to work now, a setting of 100% only yields $20 because you are only collecting 20% of their income (and presumably a 50% tax setting would get you only 10%, if the function is linear).

The way things ought to work, however, is that a setting of 100% means you are extracting all of their income but only getting 20% of it for your use, because the other part of it is disappearing into "the system" somewhere.

In each case, you only get the same amount for your spending, but the consequences are quite different in game terms, because only in the second scenario you are actually draining the POPs of their ability to buy things they need. In the first scenario, you are barely scratching them. That's not the way things worked in the original, and, as I have said, it makes it impossible to tax the POPs at a high enough rate to get them pissed off,* which cannot have been what was intended.

*- EDIT: At least, it is impossible to do so at the beginning of the game. We don't know what happens later on - yet.

That is certainly a valid view, and from my reading on this forum you are not the only one to feel that way. I look at it a little differently.

In present day America we have a complicated tax code, but to relate it to the game there are different tax rates for poor, middle class, and rich. However many people cheat on their taxes. They claim deductions they are not entitled too, create "businesses" that generate "losses" and engage in other strategems to aviod paying what they should. As a result the government does not get what it wants to, but the money has not "disapeared" somewhere, it is still in the hands of the tax cheat.

Now imagin the situation in 1836. No business reporting earned wages to the government, no withholding, no Internal Revenue Service. If people want to under-report their income, hide their crops, drive their cattle into the woods when the tax collector comes by there is not much to stop them. The governemnt collects less, the people keep their money. As time passes the government becomes more efficient in identifing revenue or other taxable items, and develops policies, prodecures and mechanisms to assist in its collection. When that happens the governement gets more, and the people have less.

At least that is how I see it.

 

[Kriegsspieler]

That is certainly a valid view, and from my reading on this forum you are not the only one to feel that way. I look at it a little differently.

In present day America we have a complicated tax code, but to relate it to the game there are different tax rates for poor, middle class, and rich. However many people cheat on their taxes. They claim deductions they are not entitled too, create "businesses" that generate "losses" and engage in other strategems to aviod paying what they should. As a result the government does not get what it wants to, but the money has not "disapeared" somewhere, it is still in the hands of the tax cheat.

Now imagin the situation in 1836. No business reporting earned wages to the government, no withholding, no Internal Revenue Service. If people want to under-report their income, hide their crops, drive their cattle into the woods when the tax collector comes by there is not much to stop them. The governemnt collects less, the people keep their money. As time passes the government becomes more efficient in identifing revenue or other taxable items, and develops policies, prodecures and mechanisms to assist in its collection. When that happens the governement gets more, and the people have less.

At least that is how I see it.

I agree with you, but remember that in 1836 the ponly taxes were on property, excises, and import duties, because that's what they could collect. So the way the game represents the entire system is pretty abstracted, except for tariffs, which are directly represented. In the original version of the game, the maximum you could hope to set the tax slider was around 50%, and even at that level you got a slow creep of MIL. So you set it there, you accepted a trickle of income, and you hung on waiting for some of your techs to boost your income in one way or another. That's really what is still called for.

 

[Baneslave]

The way things ought to work, however, is that a setting of 100% means you are extracting all of their income but only getting 20% of it for your use, because the other part of it is disappearing into "the system" somewhere.

Bad tax efficiency isn't about corrupted bureaucracy, it is about lack of bureaucracy to collect the taxes. If tax collector can't find farmer's pig, the farmer isn't going to throw it to lake or anything.

 

[RickInVA]

I agree with you, but remember that in 1836 the ponly taxes were on property, excises, and import duties, because that's what they could collect. So the way the game represents the entire system is pretty abstracted, except for tariffs, which are directly represented. In the original version of the game, the maximum you could hope to set the tax slider was around 50%, and even at that level you got a slow creep of MIL. So you set it there, you accepted a trickle of income, and you hung on waiting for some of your techs to boost your income in one way or another. That's really what is still called for.

And I agree with you that it should be possible to annoy your pops with taxes at any time. Still, as King says it is not the taxes per se that annoy the pops, it is a lack of what money can buy. When most people lived on farms it was hard (not impossible surely) to tax them so much that they didn't have food (since they grew their own). And as you point out taxes on income were late additions in many countries, so a factory worker, living in a rented tenement, isn't really paying any taxes except through taxes on what he buys (tarrifs). In the end it would take a much more complicated system, with options to choose the kind of taxes you were imposing etc. to really model this correctly. So I believe that the designers made a choice that the tax system would be simpler and show its real suite of choices later in the game when tax effiency is higher, and in real life when direct taxes like an income tax were created with all their attendant strife and discord.

 

[Kriegsspieler]

And I agree with you that it should be possible to annoy your pops with taxes at any time. Still, as King says it is not the taxes per se that annoy the pops, it is a lack of what money can buy. When most people lived on farms it was hard (not impossible surely) to tax them so much that they didn't have food (since they grew their own). And as you point out taxes on income were late additions in many countries, so a factory worker, living in a rented tenement, isn't really paying any taxes except through taxes on what he buys (tarrifs). In the end it would take a much more complicated system, with options to choose the kind of taxes you were imposing etc. to really model this correctly. So I believe that the designers made a choice that the tax system would be simpler and show its real suite of choices later in the game when tax effiency is higher, and in real life when direct taxes like an income tax were created with all their attendant strife and discord.

No doubt you're right about what is meant to happen later in the game. But your own experience shows what the consequences of these choices have been for the early part of the game.

 

[unmerged(138094)]

This thread was very helpful in giving budget advice. Previously, I, being a Victoria newcomer, kept tanking my budget immediately.
Please correct me if any of the info is incorrect:
Poor Tax: 100%, Middle Tax: 60%, Rich: 0%.
Military: 10%, Stockpile: 25% (I kept putting it at 100), Admin: 60%, Education: 60%.
Tariffs: 0%
Expand SOI as fast as you can, and subsidize factories until they're profitable.
________________________________
I can also see both sides of the tax efficiency debate

 

[RoboCzar]

Hey, does anyone know why a full 1.1% of my wealthy and happy Aristocrats are demoting to Farmers? The game rounds up fractional POPs, so basically there is a continual drain for a reason I can't fathom. Are they part of a "back to the land" movement? Why would they ditch their enormous wealth just to fill RGO space (and poorly at that)?

Wouldn't it make more sense to stay wealthy, increase the efficiency of an RGO and attract more workers, as I am expecting them to?

 

[Kriegsspieler]

Hey, does anyone know why a full 1.1% of my wealthy and happy Aristocrats are demoting to Farmers? The game rounds up fractional POPs, so basically there is a continual drain for a reason I can't fathom. Are they part of a "back to the land" movement? Why would they ditch their enormous wealth just to fill RGO space (and poorly at that)?

Wouldn't it make more sense to stay wealthy, increase the efficiency of an RGO and attract more workers, as I am expecting them to?

I can't answer the question directly, but I too have notied that capitalists turn up in places where the overall income generated cannot keep them in clover. Atlanta is a good example. No matter what you do (at least, during the first 5-7 years of the game, which was when I was paying attnetion to this) the province just can't make enough income to keep even their life needs satisfied.

 

[cwg9]

I am having trouble with this, because I can't keep that fabric factory in "American New England" (who came up with that name? ) going. I've created a national stockpile in cotton, I've allowed my factories access to my stockpile, the other fabric factory can turn a profit without problem, so why can't this one? There appears to be sufficient worldwide demand for fabric to make it profitable.

Subsidize the factory if you can afford it, or let it close if you can't. Then build up the rail in the province. Once the railways are built you should be able to reopen it and it should make a modest profit. Part of the problem is that world prices for fabric seem to crash early on because there aren't many clothing factories, but then slowly start to go up as more demand comes online. Also watch the cotton market and research the tech that has all the inventions to boost cotton production if prices start to go up, that will kill your fabric industry too. That tech also has a nice invention that boosts fabric factory output by 10% so it's a win-win.

 

[cwg9]

This thread was very helpful in giving budget advice. Previously, I, being a Victoria newcomer, kept tanking my budget immediately.
Please correct me if any of the info is incorrect:
Poor Tax: 100%, Middle Tax: 60%, Rich: 0%.
Military: 10%, Stockpile: 25% (I kept putting it at 100), Admin: 60%, Education: 60%.
Tariffs: 0%
Expand SOI as fast as you can, and subsidize factories until they're profitable.
________________________________
I can also see both sides of the tax efficiency debate

Honestly, this is fine if you are in dire straights, but you shouldn't need to take such drastic steps.

In the first few years you should be able to have a healthy income with:
Education, Admin, and Military at 60%
Full tariffs (i.e. 25%)
Poor taxes 50%
Middle taxes 35%
Rich taxes 20%

As your economy gets going, you should be able to both lower taxes and increase spending easily. If on the other hand you get into tough times, don't hesitate to raise taxes and if absolutely necessary lower the spending sliders a bit. Doing crazy things like lowering your national stockpile spending or disbanding your army is sheer lunacy and should never be necessary. Just raise taxes instead! Also don't hesitate to take loans, interest rates are so low it is practically free money.

 

[telesien]

I just wonder what the 20% effeciency really means.

Do the collectors come in too few numbers so they can't carry that much money?
Do they come to each person only every 5 years?
Or are people able to hide their income from them?

I know Paradox most likely didn't think that far, but I'd like to hear what you imagine

 

[ajm317]

So what's the reasoning behind keeping education and admin spending at 60%? The U.S. starts with low literacy, fewer than optimal clergy and generally low administration efficiencies. I funded both at 100% without too much in the way of problems.

 

[TheDarkside]

So what's the reasoning behind keeping education and admin spending at 60%? The U.S. starts with low literacy, fewer than optimal clergy and generally low administration efficiencies. I funded both at 100% without too much in the way of problems.

I hesitated to go up to 100% based on some comments from betas in their AARs where they tried to explain that setting these sliders too high can lead to long term consequence as you end up over-promoting clergy & bureaucrat pops who in turn need to be paid and become a drain on your economy.

At least, that is the way I understood it

 

[ajm317]

I hesitated to go up to 100% based on some comments from betas in their AARs where they tried to explain that setting these sliders too high can lead to long term consequence as you end up over-promoting clergy & bureaucrat pops who in turn need to be paid and become a drain on your economy.

At least, that is the way I understood it

Well I certainly didn't have any problems overpromoting clergy. I needed a NF to get any of those.

Bureaucrats though, what's to stop you from just lowering the slider once you get enough of them? If you set it to 100 and leave it there for 100 years that might be bad, but setting it to 100 at the start won't necessarily result in that effect.

 

[Uitra]

Setting tax to 100 % should affect the people MORE.

Some say it is ok, they can just "cheat". I think the goverment intention to tax 100 should cause dissent of some kind.

But not all people are like this (cheaters), some people are actually honest people. And they will travel to the nearest tax office and pay everything even if no tax collector came to their door.

I think CRIME rate also should rise if you over raise tax to 100% to get 20 efficient tax. Due to all the poor honest people die out, and more and more people become criminal by cheating on the tax.

If you are criminal, it is more easy to other criminal stuff.

 

[BonSequitur]

Apparently, if you set it at 100% then clergy and bureaucrats are paid so much money they begin to promote to aristocracy and officers. This seems to be the reason why at 100% education funding you need an NF to get clergy; lower it down to a point where clergy are getting their needs but not promoting. You want pops to promote to clergy and then get stuck there, not promote to clergy and buy Cadillacs on their generous government paychecks.

About tax efficiency, I imagine it reflects more the fact that there is less taxable income period. Early in the game, all you can tax are property and excises, and this is abstracted as the 23% of tax efficiency - people just don't have that much income that can be taxed. Later on, with the development of financial markets and income tax, it's possible to actually bleed the population dry, but in the early game income tax hasn't been invented yet. You simply can't tax people to the point that they suffer; all your taxation is doing is making certain articles more expensive, forcing them to pay a tax on their property, and so on. The game represents this as a maximum fraction of income you can take from pops. Compared to V1, Tax policy is easier to set now, at least for the early game, but spending policy is more involved. Tax efficiency and admin efficiency are separate.

 

[ajm317]

Apparently, if you set it at 100% then clergy and bureaucrats are paid so much money they begin to promote to aristocracy and officers. This seems to be the reason why at 100% education funding you need an NF to get clergy; lower it down to a point where clergy are getting their needs but not promoting. You want pops to promote to clergy and then get stuck there, not promote to clergy and buy Cadillacs on their generous government paychecks.

It's true that clergy can promote to aristocrats, but I don't think that lowering education spending is optimal. You get a 1.6% bonus to to clergy conversion at 80% spending. Typically this means that all their luxury needs are fulfilled, and I get around 4-5% converting to aristocrats. Lowering the spending might make less convert to aristocrat, but would also lower the number of farmers and laborers converting to clergy. Since the number of clergy is tiny compared to the number of farmers/laborers I doubt this helps you. If 5% of your clergy convert to aristocrat and 1% of your farmers convert to clergy, that's a net growth for the clergy.

If your consciousness is extremely high no one will convert to clergy, perhaps in that case it is a good idea to lower education spending to get them "stuck" there.

Further my understanding is that the education slider plays in to literacy growth rates. As a result I decided to put it at 100 even though nothing over 80 offers a bonus to clergy growth.

Bureaucrats did not require a NF to grow regardless at 100% spending (except in some states), so again it wasn't an issue.

 

[Kayapo]

Of course it's about unmet needs, but what's the difference? My point is that as things stand now, there is absolutely no pain involved to collecting taxes, regardless of where you put the slider. If you can begin the game with the slider set at 100%, thereby raking in boatloads of money, and then gradually reduce it as your efficiency improves, keeping your income steady (actually it will increase, because the population will grow), it makes the tax sliders nearly meaningless. If King were to show up here and say this is WAD, I would be flabbergasted.

Well, if 23%(real) taxes means boatloads of money for that country while still leaving enough for the pops to buy their needed goods I don't see what the problem is.

Though I agree with you that this system is not very intuitive and if I may say so doesn't make a lot of sense either. To me it would make a lot more sense if 100% taxes meant that the tax collector got all the income from a said pop, even if he can't get to do the same to all pops, even if most of that money disapears into corruption he still got 100% of the income of a pop. Setting your taxes to 100% should mean that the people that are affected by it (based on your efficiency), will have 0 money left for their needs.

Unless of course your point is about balance, that it feels too easy to just set your tax to 100% on every game. Though we should probably wait for the release to start making balancing issues.