Taxes and trade

Day 1,412, 09:04 • Published in Russia Russia • by thebuc

So why don't the countries in the game open up more free trade by lower taxes?

It opens the markets to more fierce competition and thus prices of products drop. I suppose in turn the companies in the home country will have to lower wages to compensate and become more profitable.

So the average citizen will probably have less $ each day but be able to afford equivalently cheap products.

Additionally, the lower prices caused by this competition may cause more citizens to move to your company to purchase all the inexpensive goods.

And it might entice people in other countries to waste there gold buying licenses to sell in your country, versus how that could have been used to build more strength or increase their home production.

Also, by selling their goods in another country they are not selling their goods in their home country, obviously. But this is important because then they all become that much more poor in other countries because there will be that many less products to purchase at home.

And I imagine there might even be more tax revenue generated for the government on this system. Countries with 99% tax on imports get no money from imports.. simply because no one can afford to sell there. But if taxes are 5% many more people will be able to sell products and thus the tax will be much more effective. It is possible that this effect is balanced out by the same amount of decrease in tax revenue from home sellers not being able to sell as many products because their market share has changed.

I particularly like how Russia as already using a policy of low taxes, but I don't see my many other countries do not. Notably i think Canada and the USA have a low import tax policy, but i do not know of many others.

It simply doesn't make sense. Anyone have thoughts on this?

edit: perhaps it is all because with this policy worldwide everyone would move to the countries with highest% production bonuses because they are most efficient. And if you are not one of these countries than it is not in your best interest to lower imports. Hmm.