What do you think about the exploiting tax strategy? The so-called mp strat.

[Titanius Puffin]

So you're effectively paying r*a annual interest on perpetual loan of b*r*a*5 (and which has no effect on inflation). With effective interest rate of 0.2/b you can get an idea on what provinces it's a good deal.

Rather than interest payment, the player pays a perpetuity; a regular fixed payment forever.
Good point about the temples, but I'd like to add that building light ships can be much, much, more rewarding than temples.

Edit: I thought Berlin made grain, but it makes linen. I'll keep my original argument, but I acknowledge the difference is important and may change some folks decisions.

Regarding the strategy of exploiting tax base. In some cases I might consider it, but I wouldn't be as keen on exploit the tax base in Berlin because it makes linen.
Linen isn't too important for me (though it's far better than grain) it may not always be best using production development there to 'balance' manpower.

Linen's 'trading in' bonus provides a mercenary maintenance discount, which doesn't enthuse me. It does fetch an okay price though.
I lavish production development on goods that fetch a reasonable price but also have 'trading in' bonuses I find more useful. I also lavish production on provinces that have a coastline.

If you're interesting in developing any kind of navy (which I am), production in coastal provinces helps since you can cut shipbuilding times down to 30% of original times, or 20% if your determined (standard ship building time is 2 years for heavy ships, which I consider a big cost). There are increasing returns on getting your ship-building times down. You can build 2.5 times the number of ships per year if you get ship building down from 50 to 20%.
I hope you can see my rationale.

So for me, exploiting tax base in coastal provinces that have really interesting trade goods makes more sense.
But not in Berlin as much.

 

[Kryndude]

You don't have to do a lump-sum repayment at the end like you do a loan, though.

Oh, right. That makes it 26 years then. After 26 years it's always losing money compared to taking a loan. That's still pretty bad... or is it?

Wait so if you don't pay back a loan for 25 years you get 0.5 inflation which is 18.75 admin points. That's quite a lot. If we translate that into money how much would that be? Maybe exploit is actually viable?

Man, since when did EU4 require a degree in finance to play?

 

[alexti]

Wow, okay. That really puts it into perspective. So I guess base tax 5 or even 4 is okay to exploit depending on the situation? But that's just the money-side of it, we need to figure out if it's also worth it MP-wise.

edit: nevermind, it's garbage compared to loans. It's basically losing money forever after 5 years... am I right?

Not if you used the cash to conquer something Loans also losing money (and generate inflation) until you can repay them. And when you are in a position to repay loans you probably don't care about the small loss due to tax exploit.

 

[Kryndude]

Not if you used the cash to conquer something Loans also losing money (and generate inflation) until you can repay them. And when you are in a position to repay loans you probably don't care about the small loss due to tax exploit.

Yes, but I want to know at what point exploit gets better than loan. Base tax 5? 6? 7?

 

[alexti]

Yes, but I want to know at what point exploit gets better than loan. Base tax 5? 6? 7?

In a normal case probably 5. Same rate, but without inflation. To some degree it depends how you play. I find that when I play some hard OPM start (where loans are not optional) by the time I get out of loans I would have 1000+ in development, so initial loss of few development points in tax won't matter.

 

[Kryndude]

In a normal case probably 5. Same rate, but without inflation. To some degree it depends how you play. I find that when I play some hard OPM start (where loans are not optional) by the time I get out of loans I would have 1000+ in development, so initial loss of few development points in tax won't matter.

Thank you for your opinion. Unfortunately, I personally still can't decide which is better.



I added more analysis to my earlier post regarding monarch points. Anyone interested please have a look. I'd like to hear what you think about it.

What do you think about the exploiting tax strategy? The so-called mp strat.

I can't tell if it's a legit strategy or not. Here's what I've been able to understand from talking about this in other communities. 1. More effective if a province already has high base tax, meaning that exploiting isn't always the same value...

forum.paradoxplaza.com

 

[Titanius Puffin]

Man, since when did EU4 require a degree in finance to play?

Finance is everywhere man. It's like maths but richer and less interested theory, so it gets into all the big parties.
Plus some of us took economics. =P

A great formula for your question is called the 'present value of a perpetuity' all you have to do is reverse it to apply it to your question.

Spoiler: Finance formula for perpetuity - i.e. the OP's cost of exploiting resources

The 'present value' of a perpetuity is:
Present Value = annual cost/interest rate(or 'discount rate').
To understand 'present value' think of getting 1 ducat a year in the future. If there's at 4% interest rate on offer from the bank, getting that 1 ducat is like getting 0.96 ducats now (1/1.04 ) because you could've had 4% interest more by lending the ducat and getting interest if you'd had it earlier.

In normal person language this formula asks: how good is it for me now, to get regular payments forever.
Answer: how much you're getting divided by how bad it is to wait - higher interest rates means waiting is bad.

So flip the question on it's head : how bad is it for me now to make regular payments forever.
Answer: how much you're paying divided by how much better it is to wait - higher interest rates mean waiting is better.

Present value cost of exploiting one base tax: 1ducat annually / 0.04 interest
4% interest is chosen because it's the going interest rate for loans in the game.
So 1/0.04 is 25 ducats.

Exploiting 1 base tax brings 25 ducats in present value costs assuming that an EU4 game goes on forever.
Since 300 odd years is a pretty long time, and the compounding 4% interest makes those last payments insignificant, 25 ducat cost is good enough.

(We can ignore tax efficiency I think since it's just multiplying what you get, and what you lose, by the same amount)

 

[Kryndude]

We can ignore tax efficiency I think since it's just multiplying what you get, and what you lose, by the same amount

Not if the value changes, but that's not important. So with 4% interest rate, paying 1 ducat per year forever has the same value as paying 25 ducats now? Is that correct? Then does that mean if I'm in a situation to take a loan, it's always better to exploit anything that gives me 25 ducats or more?

 

[Cavalry]

Oh, right. That makes it 26 years then. After 26 years it's always losing money compared to taking a loan. That's still pretty bad... or is it?

There are more. Monthly income willl boost your other event income (and loss). The tax exploit is conflicted with manpower exploit, you cannot do both in a province, so think twice about what you really want, it is not the regular economy. Better to consider them on win a war or not.

I list a reference order of sources to get in emergency, for new players or for corrercting me:
Gold: selling crownland, get loan, debace currency. Tax exploit can be the last in line because we may need manpower first. In general it is after loans.
Manpower: Manpower from MIL advisor or noble estates, Manpower from Tributary countries, Slacken Recruiting standard, mercenary, manpower exploit, . Manpower increase very slowly so it should be planned long term, not when you are running out of it!

 

[Kryndude]

There are more. Monthly income willl boost your other event income (and loss). The tax exploit is conflicted with manpower exploit, you cannot do both in a province, so think twice about what you really want, it is not the regular economy. Better to consider them on win a war or not.

I list a reference order of sources to get in emergency, for new players or for corrercting me:
Gold: selling crownland, get loan, debace currency. Tax exploit can be the last in line because we may need manpower first. In general it is after loans.
Manpower: Manpower from MIL advisor or noble estates, Manpower from Tributary countries, Slacken Recruiting standard, mercenary, manpower exploit, . Manpower increase very slowly so it should be planned long term, not when you are running out of it!

That's actually a very good point. Thank you for mentioning that.

So to summarize, exploiting tax is not worth it just for the dev cost reduction, mathematically worth it for substituting debt if it reaps 25 ducats or more, but it does directly compete with exploiting manpower so one should be cautious when using it, and finally there may be some edge cases where it's just worth it for the dev reduction like going for one culture or one faith, or if you need to immediately embrace an institution for some reason you can exploit tax from provinces that hasn't received it yet and farm ducats while reducing embracement cost at the same time.

 

[Titanius Puffin]

Not if the value changes, but that's not important. So with 4% interest rate, paying 1 ducat per year forever has the same value as paying 25 ducats now? Is that correct? Then does that mean if I'm in a situation to take a loan, it's always better to exploit anything that gives me 25 ducats or more?

Fair point about tax efficiency changing.
But yes, you've got the right idea. Next year's ducat is worth 0.96 ducats, and next year's after that is worth 0.92, and then 0.88, 0.85, 0.82, 0.79 always getting smaller.
And yes, I think you're right about exploiting dev being worth it if you get over 25 ducats for it (by and large).

Just as tax efficiency can change, so can a discount/interest rate vary. In game, you can do that with ideas/policies. This might change your calculations.
In reality, we'd use those kind of numbers to describe people who are more - or less - patient.

Those loan-shark types who charge 30% interest per month for a loan (or break your fingers)? They're not patient people.

(edited to agree more with previous posts)

 

[Kryndude]

Fair point about tax efficiency changing.
But yes, you've got the right idea. It works because next year's ducat is worth 0.96 ducats, and next year's after that is worth 0.92, and then 0.88, 0.85, 0.82, 0.79, always getting smaller.

However, just as tax efficiency can change, so can change your discount/interest rate. In game, you can do that with ideas/policies.
In reality, we'd use those kind of numbers to describe people who are more - or less - patient.

Those loan-shark types who charge 30% interest per month for a loan (or break your fingers)? They're not patient people.

Well at least the game's very generous in that regard. Anyways, I'm glad I could finally figure this out and go back to playing the game again. Thank you so much for your insight!

 

[Titanius Puffin]

Just in case it's not clear:
The 'present value' of a loan, even a weird Eu4 loan, should be zero. The money you get now cancels out the money you pay later.

I'm not too sure exactly on the present value of building a temple/cathedral, or other buildings. But if you want to do comparisons, you can work it out with the perpetuity formula if you like.
Personally, I'm like trade and light ships when it comes to generating revenue. They can give you ludicrous returns to investment. But they are situational tools, and they might not fit your way of playing. Some people don't seem to like them, and appear to manage.

 

[TheMeInTeam]

An interesting contrast is horde razing, which is widely considered one of the best abilities to have in EU 4.

Exploiting development would be a lot more attractive if it wasn't nerfed by autonomy, but then everyone would probably exploit territories like crazy.

 

[alexti]

An interesting contrast is horde razing, which is widely considered one of the best abilities to have in EU 4.

Exploiting development would be a lot more attractive if it wasn't nerfed by autonomy, but then everyone would probably exploit territories like crazy.

It's a good thing Otherwise, every time you conquer something you would have to click on every province to exploit it. Or even worse, first wait for it to get cored and then exploit. And then don't forget to repeat in 20 years. I have stopped playing hordes largely for that reason. It makes efficient play painfully tedious.

 

[TheMeInTeam]

At least with exploit dev you can do it from macro builder, hordes can't do that to my knowledge?