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Thread: Newbie's question about taxes

  1. #1
    Sergeant Slavic face's Avatar
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    Newbie's question about taxes

    Hey, I've noticed that as most countries, I need to raise taxes to 90%-100% in order to keep a good income even without paying much to army. But such high taxes make people unhappy, also, high taxes are bad for economy. What should I do? Decrease taxes to boost the economy and take loans or keep 100% taxes?

  2. #2
    They aren't that high until you research first two rows of commerce techs. They give tax and administration effiency. At the start of game, when you set the slider at 100% the true tax is about 25%. So keep slider at maximum, at least until you will research better techs.

    You can check it if you hover over your mouse at the income from tax {under the slider}. And i don't think that high taxes make your people unhappy. I kept my slider to get 45% tax effiency [late game] and everybody gets his life needs, somebody even more. If you have only part of your nation unhappy, hover over at red place in circle. It will show you what kind of pops is unhappy. If artisans, don't care about it.They just have to promote to craftmens and work in factories .
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  3. #3
    Why do you care about your economy before you even built it? At the start of the game unless you're playing as the UK your economy is negligible if not nonexistent, so there's no point caring about it early on. When you start building up your economy you'll generally rely on the global market to consume your goods, as no nation's industry(including the UK) is developed enough to meet the demands of the entire world. It's only later on when industries become massive that you really start caring about your own pops, as at that point most industrious nations can fulfill the majority of their own populations' demands leaving your factories with significantly less demand so if you want to keep expanding them you need to increase the demand, which is where caring for your own pops comes in. That late in the game you should have various tax efficiency techs as well as various techs that improve mining and farming efficiency. All of these techs will increase your income and allow you to lower taxes, at the very least in peace time, which in turn lets you enrich your population and allow them to increase their demand for various goods which in turn lets you expand your factories and still sell most if not all of their products.

  4. #4
    As far as I understand, early on, many economies rely on artisans; as they are few factories, it is them who produce most of manufactured goods, so you wouldn't want to tax them much; if you do, they won't earn a living and demote; if you don't, they'll fulfil most of their needs and will promote (which allows for more capitalists which should be one of your long term goals). This is especially true if you have access to high demand goods; say tropical wood or sulfur can earn good money to your artisans.

    In the other hand, once you start having manufactories, you'll want to lower taxes for capitalists, which will allow them to invest in industry, while making sure they won't demote.

    Overall though, right at the start, most economies don't really seem balanced; often times, there's not even enough bureaucrats to ensure efficient taxation, so for the first few years, the main goal I think is to just tax your pop, get the whole thing running and later only care for your pop. It's also good to get a first few tech to increase efficiency of your pop: they'll earn more, which will allow you to tax them less for a similar result. Taxing heavily also allows to setup quickly a first few factories if your country still doesn't have.

    To my understanding, taxation affects mostly wether your pop earn a living; if they don't, they will demote; if they do and can buy fancy stuff, they both buy goods for your economy (rather than your factories running a deficit), and makes them likelier to promote.

  5. #5
    Quote Originally Posted by Thrake View Post
    As far as I understand, early on, many economies rely on artisans; as they are few factories, it is them who produce most of manufactured goods, so you wouldn't want to tax them much; if you do, they won't earn a living and demote; if you don't, they'll fulfil most of their needs and will promote (which allows for more capitalists which should be one of your long term goals). This is especially true if you have access to high demand goods; say tropical wood or sulfur can earn good money to your artisans.

    In the other hand, once you start having manufactories, you'll want to lower taxes for capitalists, which will allow them to invest in industry, while making sure they won't demote.

    Overall though, right at the start, most economies don't really seem balanced; often times, there's not even enough bureaucrats to ensure efficient taxation, so for the first few years, the main goal I think is to just tax your pop, get the whole thing running and later only care for your pop. It's also good to get a first few tech to increase efficiency of your pop: they'll earn more, which will allow you to tax them less for a similar result. Taxing heavily also allows to setup quickly a first few factories if your country still doesn't have.

    To my understanding, taxation affects mostly wether your pop earn a living; if they don't, they will demote; if they do and can buy fancy stuff, they both buy goods for your economy (rather than your factories running a deficit), and makes them likelier to promote.
    You're correct, but it's ill advised to care for your Artisans. Artisans are simply inefficient and unless you're playing China are in too small numbers to really make a difference. Instead let them demote to farmers, laborers and later craftsmen, they'll be much more useful to your country than artisans.

  6. #6
    Quote Originally Posted by Owl Raider View Post
    You're correct, but it's ill advised to care for your Artisans. Artisans are simply inefficient and unless you're playing China are in too small numbers to really make a difference. Instead let them demote to farmers, laborers and later craftsmen, they'll be much more useful to your country than artisans.
    In one game, I've been tracking pop's wealth in the begining; the most wealthy one, by far, were artisans, so I like thinking that this is them that make for the first capitalists in my country.

  7. #7
    Quote Originally Posted by Thrake View Post
    In one game, I've been tracking pop's wealth in the begining; the most wealthy one, by far, were artisans, so I like thinking that this is them that make for the first capitalists in my country.
    Perhaps, but to be honest there's no need to rush capitalists either. In order to start up an industry from scratch it's much better to use a State Capitalism/Planned Economy party rather than Interventionism/Laissez Faire, which negate the need for capitalists early on. Yes, the capitalists' factory input bonus is great, but that requires you to already have an industrial base in order to utilize, so first build up factories than start encouraging capitalists to give them the revenues from the factories.

  8. #8
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    In almost all of my games playing a western/westernized power in early game, artisans are usually the ones swimming in cash. Especially the ones producing beer and wine.

    They become unimportant later on once a good amount of fully-staffed and well-placed factories have been built. But in the early game, your nation's economy runs on artisans. They produce the goods your population needs to prevent rebellion/emigration, and at a cheaper rate. Not to mention they form backbone of early armies, before a real working armament industry emerges.
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  9. #9
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    Well, thanks for the advice. They're helpful

  10. #10
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    Remember that taxes are affected by tax_efficency, so a 100% tax ratio from the slider usually equals ~40% or so actual tax.

    As for taxation strategies:
    Tax as much as you need, if you still lack money use tariffs. Once your economy stabilizes reduce tariffs to 0%. If you need capi money for investments reduce rich taxes, otherwise set negative tariffs.
    I personally keep taxes maxed for most of the game and instead set negative tariffs to redistribute wealt to all pops.

  11. #11
    You didn't mention this, but tariffs are important well. Tarrifs act as a direct tax on sales from stuff coming from outside your country. It too has an efficiency but it tends to be much more efficient than income taxes. Tarrifs can be volatile and dangerous, so be careful. Tarriffs can be the difference between a factory runninh profitably, and a factory sinking into despair.

  12. #12
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    You mean high tarrifs destroy my economy?

  13. #13
    Quote Originally Posted by Slavic face View Post
    You mean high tarrifs destroy my economy?
    It MAY have a greater effect than income tax because it taxes everything purchased outside of your borders equally, whether they be good purchased by pops to fulfill needs or for factories purchasing input goods. Income tax, however, is applied BEFORE a purchase is made. This means factories aren't taxed at all (no corporate tax in this game). Practically, since pops purchase needs before luxuries, income tax only reduces how many needs or luxuries they can purchase, rather than penalizing all goods equally (ofcourse, local purchases aren't taxed)

  14. #14
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    Quote Originally Posted by Slavic face View Post
    You mean high tarrifs destroy my economy?
    They hurt your factories, because they have to pay an extra % to you whenever they buy their ressources. So unless you subside them, the low-profitable ones will go bankcrupt pretty quickly.
    Never set high postive tariffs as an industrial nation.

  15. #15
    But.. if he would have the resources needed for factories in his country or SoI, why he shouldn't max tarrifs to get moar monies?
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  16. #16
    Quote Originally Posted by SknerusMck View Post
    But.. if he would have the resources needed for factories in his country or SoI, why he shouldn't max tarrifs to get moar monies?
    Because, by definition, if he could fulfill every need without imports, he'd be getting zero from tarrifs regardless off how high it is. Two, high tarriffs, if used unwisely, can wreck economies and drive militancy and rebellions. I'm not saying don't use it ; I am saying use it carefully.

  17. #17
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    Quote Originally Posted by SknerusMck View Post
    But.. if he would have the resources needed for factories in his country or SoI, why he shouldn't max tarrifs to get moar monies?
    No, because his factories still have to pay him extra for everything they buy, even if it is from within the country (iirc).
    Even if I am wrong: Never use positive tariffs as an Industrialized nation unless you have no other choise.

  18. #18
    If you're playing PDM tariffs are a better idea. Early-game finances are a bother, but most often the actual national treasury isn't much of a worry after 1860 or so.

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