[USWP] Lowering the Work Tax to 8%
Kemal Ergenekon
Greetings fellow eAmericans,
United States Workers Party (USWP) has always been the party associated with fiscal responsibility. We possess the architects and avid supporters of every financial plan which has led our country to greatness, be it about the budget, taxation, or response to admin-induced economic changes.
Last month, our member Henry Pfeiffer Arundel had supported a decrease in the Work Tax from 12% to 10% as a result of the reserves target being met.
This month, new changes have taken place. In particular, the raw materials prices have continued to plunge despite the lack of a similar decrease in average wages. Taken together, they have serious implications for the profitability of raw materials companies that form the backbone of our economy.
Consequently, I have recently proposed a law in the congress to lower the Work Tax rate from 10% to 8%, which is also unanimously supported by my party USWP. I think this will serve the goals of helping our players, as well as keeping government revenues high at the same time. It is fiscally responsible, hence USWP supports it.
Without further ado, please find the full text of the proposal below.
Best regards,
Kemal Ergenekon
United States Workers Party
Chairman of the Economic Council
Fellow congresspeople,
I would like to bring to your attention the issue of the work tax. As you well know, I and my party USWP have been pro high taxes for the last year. This was due to (1) the insufficiency of the reserves to deter threats against our country (2) the economic conditions which allowed a high degree of taxation (high prices and full bonuses).
Last month, we have lowered the work tax rate from 12% to 10% as a result of reaching a satisfactory level of reserves. Given our current status of reserves, it was a good choice.
This month has brought two additional changes on top:
(1) Plato introduced the dictator module. At the beginning, this has tremendously increased our security concerns since theoretically an enemy could attack us with no notification, and condemn us to a fate worse than being completely invaded overnight. However, we were able to legislate a law to install the current CP as our dictator. This is going to help us in our security considerably.
(2) The prices of FRM and WRM which form the backbone of the economy of most our players as well as communes has went down. Despite this decrease, the average wage showed no signs of faltering over the past few months. This has resulted in a large amount of work tax per click, regardless of the WT rate. I will explain this in detail below.
If you recall, I had alluded to lowering the work tax due to profitability reasons if the RM prices continued to fall as early as February 10. Below are my two posts:
First post:
"Going below 12% before we hit a comfortable reserve target (in the 15-20m range) would be fiscally irresponsible.
Please see my article on the issue: http://www.erepublik.com/en/article/-uswp-fiscal-responsibility-and-eus-grand-strategy-2460427/1/20
In addition, I will also consider dropping the tax rate to 9% if WRM prices fall to 0.01 permanently."
Second post:
"That's incorrect. Rubber plantations (Q5) will still be profitable at 12%, but saltpeter mines (Q4) will not. That's why I would support a decrease in WT rate if WRM fell to 0.01.
The rest of your statements are in alignment with mine. As the game is slowly dying, the revenues will eventually fall. The savers will be rewarded, the spenders will be the losers. We should tax while we can, because in the future, there won't be any."
I think the time has come to implement this drop. Here are the price developments:
- The FRM price was previously fluctuating between 0.02 and 0.03. If you had put FRM at 0.02 per unit, you would be able to sell it within a day or two. This is not the case anymore. FRM at 0.02 is rarely purchased.
- The WRM price was even lower. Posting WRM at 0.02 was generally a fruitless endeavour. You could, on the other hand, easily sell WRM on the black market at 0.015 per unit. For a while WRM price even saw 0.03, but now it is back between 0.01 and 0.02. This is anecdotal evidence, but previously any WRM offer at price 0.01 would be bought immediately. Now, reportedly, it can take some hours at times.
Long story short, effective WRM and FRM prices are either at 0.015 or somewhat below. I expect them to fall up until they reach 0.01 eventually.
What does this mean for taxation though? It means a lot.
Most of our tax revenue comes from Work as Manager clicks from RM companies. People are still operating Q3, Q4, and Q5 RM companies. Their profitabilities are affected by the RM prices and the WT collected per WaM click.
We should care about their profitability, because:
1) Obviously, we want our population to be able to operate their existing companies.
2) If we make operation of these companies unprofitable, we lose tax revenue too.
How much should we care about each tier? That depends on how much of the revenue is being generated by what type of company. Since Q4 firms were profitable when CC was cheap with respect to gold, many communes and players dating back from the bot era of 2012 have several Q4 companies. For the rest of the lifetime of the game, Q5 firms were most profitable including today, so they constitute the rest of the existing infrastructure. Lastly, some people have Q3s either due to miscalculation of profitability, or some legacy companies from the conversion of V1 RM companies to Q3 RM companies around the time WaM was introduced to the game.
Overall I think the following breakdown is a reasonable estimate:
Q3: 5-10%
Q4: 35-40%
Q5: 50-60%
What does this mean? If we can, we want Q3s to be profitable, but we can live without them if necessary. However, if Q4 RM companies become unprofitable, both the personal income of our citizens as well as our government tax revenues would fall. We don't want that to happen.
Below, I present three tables. They show the profitablity of Q3, Q4 and Q5 RM companies given different effective RM prices (0.015, 0.0125, 0.01) and different WT rates (0%-10
😵:
Effective RM Price: 0.015 (current price)
Effective RM Price: 0.0125 (could be realized soon)
Effective RM Price: 0.01 (worst case scenario - might happen in a few months)
As you can see, Q3 RM firms are already underwater at the current effective price of 0.015 at 10% WT rate. They would go be underwater with even a 9% WT rate if the prices fell down to 0.0125. And in the worst case scenario of 0.01, even a Q4 RM company could become unprofitable at 10% WT rate.
Given these numbers, I am of a mind to lower the WT rate to 8% conditional on
(1) The maintenance of our dictator law.
(2) The non-existence of a major war in which we are a target.
This would both make Q3 firms profitable again up until the worst case scenario, while making Q4 firms profitable even in the worst case scenario.
Summary: I think given our secure condition and existing reserves, it is beneficial for our country to lower the WT rate to 8%, with the unwritten assumption that it will be increased back to 10% if
(1) Our security concerns intensify.
(2) The prices go back up above 0.015.
(3) Our reserves are spent.
Please discuss.
Kemal Ergenekon,
USWP
Chairman of the Economic Council
CAPS OF THE DAY:
Comments
o: !
moar caps panpa
xdxd
The prices were down already at last vote and then people that asked for lower taxes were shut down completely by USWP. This "fiscal responsibility" looks more like a public stunt than being fiscally responsible.
False.
We have had huge problems selling it for quite awhile and had to resort to selling for 0.015 if we wanted to sell our daily produce. That was before the last tax vote.
Yes, 0.015. Read my article again. I am afraid it is now between 0.0125 and 0.015.
And there is another HeapSeppo fail. And he wants to be president....
yay for ponies
why do you want to have profitable raw companies? the price cant go any lower and all you are doing is encouraging people to make more raws if there is profit. why don't we try to kill of some of these excess raws to raise the price?
So your black market can die....
it wouldn't affect it directly and would have such a small impact. Btw that black market is funding a charity I have for new players so really it would be killing off our future
1) No one in their right mind would invest in any more FRM/WRM companies given their break-even dates measured in years. So that is not an issue.
2) We want to make existing companies profitable to work in, because that is how we derive our tax income, and how the population derives their personal income.
3) You cannot raise the global price of a good by the stuff you do in the country. because Plato allows any citizen to buy from other countries and sell it here.
well for your first point I think maybe it could help encourage some people to sell off their businesses. I think a big problem also is new players don't even know that half the time they are producing at a loss. Don't get me wrong I love profits and I would like to see things back to where they were a couple years ago. also for number 3 couldn't you simply put a high import tax on them?
We'll see if it works or not I guess
Import tax has no effect since any eUS player can buy from abroad and sell it in the domestic market, facing zero import taxes. This is why all countries in eRep have similar prices despite the differences in their import taxes.
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I'm not the one that goes on a tear every time someone disagrees with me, Kemal. 😁
😁
I agree with Kemal for partially different reasons and for entirely the same reasons.
Heh. Nice propaganda piece trying to make out it's USWP who advocate lower taxes. Clever. Say it often enough people might believe it 🙂
Yes, people, it was Artela's idea all along. Especially during her USWP days.
facts = propaganda.
nice.
isnt it a FACT that BSP was fighting for Lower Tax since forever??? or was that a propaganda?
besides, it looks like Pfeiffer is the one that holds the keys to this cause. quoting Kemal iNCi "Last month, our member Henry Pfeiffer Arundel had supported a decrease in the Work Tax from 12% to 10% as a result of the reserves target being met."---
If I were as old as you Gnil in the game, or anyone as old as you for that matter, I would seriously feel ashamed.
Yea it's not like Black sheep party has been advocating this for months... Wow
Black Sheep Party trying to always lower taxes. Uswp finally agrees and follows. Baaaa
This!!!!!
Happy to serve and inspire!
★★★★ Baaaa o7 ★★★
This is exactly how a proposal should look like!
Good work, Kemal o/
Thanks USWP for leading the way in lowering our taxes!
you know its all propaganda and lies uswp is spreading when all their members have to actually give credit to themselves and tell everyone that they lowered it. If they were the true supporters behind it they wouldn't need to. the decent thing about the article was the babe at the end.
Heres a quote for you that maybe you can relate to: When you're good at something, you'll tell everyone. When you're great at something, they'll tell you.”
---My man fifty grand the one and only WALTER PAYTON!!!
as always stealing the cause of other that have been pushing this to happen since so long now!!
what a shame!!!
Looks like you want to make this cause as USWP???
Hypocrisy at its best!!
BAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAA
drop the export tax too. it costs me over a dollar per unit to sell q7s overseas. that just ridiculous.
Export tax? http://i.imgur.com/52TGq1A.png
hmm maybe its the japanese import tax 😛
THANKS FOR LOWERING MY TAXES USWP!
you know its all propaganda and lies uswp is spreading when all their members have to actually give credit to themselves and tell everyone that they lowered it. If they were the true supporters behind it they wouldn't need to. the decent thing about the article was the babe at the end.
Heres a quote for you that maybe you can relate to: When you're good at something, you'll tell everyone. When you're great at something, they'll tell you.”
---My man fifty grand the one and only WALTER PAYTON!!!
very cheap hypocrisy from a multi-times PotUS (or probably that is your secret weapon to making it to the seat?)
THANKS FOR LOWERING MY TAXES BLACK SHEEP PARTY!!!!!!!!!
So if you always wanted to drop the taxes why didnt you? I mean with strong arguments and strong facts you can do pretty much everything. See here Kemal and the USWP came with facts and are getting the taxes lowered. That means that BSP never had the facts right nor the right arguments..?....
you know its all propaganda and lies uswp is spreading when all their members have to actually give credit to themselves and tell everyone that they lowered it. If they were the true supporters behind it they wouldn't need to. the decent thing about the article was the babe at the end.
Heres a quote for you that maybe you can relate to: When you're good at something, you'll tell everyone. When you're great at something, they'll tell you.”
---My man fifty grand the one and only WALTER PAYTON!!!
It's about time USWP got in line and followed the The Blacksheep Party to lower the Work Taxes.
Baaaaaaaaaaaaaaa
Yeah I'm surprised. Finally helping their country. Took long enough but the change in face is supported.
I hope it lasts.
USWP, finally decided to stop screwing the country over. Thank you for tossing your usual harmful ideologies out of the way and embracing one that helps the wolhe of the eUSA. I was surprised when I saw it, and even figured it to be an April fools joke.
I hope to see this trend of rational decisions by your party continue. For yours was the last major barrier preventing the prosperity of the eUSA, and now it is the last to join the path to it. Keep the roll going, lest we take steps backwards yet again.
★★★★ Baaaa o7 ★★★
Next up, help our nation restore its democracy? Eh? Eh?
No? Too soon? Not that good yet?
I'll ask again later 😉
Thanks for finally getting on board with The Black Sheep Party's legislative agenda. We appreciate the USWP finally seeing the error of its ways and coming into line with our thinking.
After months of crying in Congress our reserve was not big enough, now this move to 8% without even officially knowing what that same reserve number is.
Pretty strange isnt it?
Time to lower it even further and give the eUSA citizens a fair Work Tax, this one is still way high
Finally thank you
Work taxes were high because of the USWP, others have wanted to lower them for years. All hail our heros the USWP for doing something 4 years behind everyone else.