Taxation versus Borrowing

[miketr]

In the late 19th century the general school of thought is the following for economics.

1) In general terms balanced budgets, keep in mind that the USA has only not had a public debt like one time its history.  Again general terms I am talking about.

2) Some form of metallic standards (Silver, Gold or hybrid between the two)

For American members of the sim I suggest you read this to get some of the flavor of the debate in our own historic terms.

http://en.wikipedia.org/wiki/Cross_of_Gold

3) Protectionism on internal front and mercantilism towards unprotected markets.  The USA during this tariff period had a fairly impressive tariff wall for example.  While everyone tried to export finished products to S America and China.  Despite US tariff wall lots of stuff was still imported because of productive advantages other countries had and or monopoly of a product.

3a) UK was making something in fits and starts to what was later called the Sterling Zone, as all the British colonies / commonwealths either used the British pound or pegged their currencies to it.  It created a de facto single currency zone over 2/5 of the worlds surface and a huge market.

That is the world the game lives in, the right or wrong of it doesn't mater from OUR point of view its the world view of the time period.

Michael

[Carthaginian]

Tanthalas, I don't see were you see a problem.
When I asked (quite worried) if we (again) would have to perfectly balance our income and expenditure (coupled with only rough tax steps) I was told that this will not be a problem. In favor of KISS we would be allowed to carry over a couple percent of our GNP from one year/report to the next. I think it would be only consequent if that could be both a positive or negative value. If it's positive nothing happens, if it's negative you might have to pay a few percent interest.

Very simple, easily automated. Were is you problem?

I was able to balance my reports in N3- generally I had a surplus of something: money or BP.
I am able to not only run my household budget within my means, but I am generally running at $800 a month surplus; I use no credit cards and do not really bring home all that much money compared to most folks.

Thus I cannot see all the whining, moaning and complaining about wanting to be able to use money that they do not have. Even in real life, I can manage to live within my means, so my opinion is that governments- both real and fictional- should damn well do so.

[Nobody]

If negative carry overs will not be allowed, then I won't complain. But I think that would be wrong.

Balancing N3 reports was easy: make sure you spent less than half on the military and spent the rest in the economy. But there appears to be no civil economy in N4 so that is not an option. In case of war all you can do is doubling your tax, but the cost of the military (which is your entire budget) rises by a factor of over 2.25 to 9. There is no way to pay that without debts.

And it appears to me that no real world government was ever able to have more money than debts for an extended period of time.

[Carthaginian]

Sounds to me like the system is 1.) broken, as we will not be able to go to war and pay for it OR 2.) people will just have to be very careful during wartime, so as not to overstress their economies... like in RL.

I am leaning strongly toward the latter. In spite of any problems I might have with the system, I dom't think the mods made one so bad that you simply can't afford a war.

[TexanCowboy]

Carth, face it; many people in this world aren't smart. Governments will incure debts. It's the natural course of events, it's caused the collapse of many governments since ancient days. Not allowing some system of borrowing from the private economy will mean  governments won't be able to function as they normally should. Heck, the nation of Texas had $10 million of debts when annexed; I expect many, many smaller nations to be like that, and some other large nations.

[Ithekro]

Even in N2 it was very, very difficult to do anything during a war.  Rohan had to scrap ships and hold off maintainance of some older vessels just to keep the army and navy fighting...and it took several years to repair not only the fleet, but also the economy...which was helped by actually winning the war and gaining some spoils from it.

It was helped even more by the change to N3...while the economy and navy had been repaired by then, the change in systems allowed Rohan to actually build at a more normal pace, as for all of N2 naval construction was severly retarded by the lack of resources avalible for projects.  Construction of a cruiser could take two to three times longer than it should.  Though in N3 the same problem came up, but it was more due to the number of projects on the table that the limited amount of resources (Rohan was building multiple capital ships, cruisers, and smaller ships at the same time as expanding shipyards and building a canal....so there were delays in naval construction....in N2 there was barely enough to build one ship at a time at full capacity when you needed to be building three to keep up with the rate of ship decay)

[Darman]

I'm of the opinion that borrowing between players should be allowed. 
I'm also of the opinion that either banking your surplus should be allowed, or borrowing from your economy (with interest rates defined by credit rating with a theoretical system below):
Debt as % GDP/GNP
0.0-0.9% = AAA = 3%
1.0-1.9% = AA = 5%
2.0-2.9% = A = 7%
3.0-3.9% = B = 10%
4.0-5.4% = C = 14%
5.5-6.9% = D = 19%
7.0-8.9% = E = 25%
9.0+ % = F = 40%

And a default results in the amount you owed being deducted from your economy. 

This may be too complicated but it just came to me and appears to make some kind of sense.

[miketr]

In case of war all you can do is doubling your tax, but the cost of the military (which is your entire budget) rises by a factor of over 2.25 to 9.

Part of the reason why I favored with the first draft a max tax rate of 25% in war time.

In N4 one of the things is we don't want long drawn out multi year wars.

Michael

[Carthaginian]

IF some kind of deficit spending is instituted, it will kill the sim. It WILL be abused, just as it is in real life.
Ask yourself just how much realism you want in your game... and imagine your nation 100% of its GDP in debt while you do it.
Give those with insufficient experience or insufficient responsibility enough rope, and they hang themselves- and quite often, so do those who should know better.

[Desertfox]

Carth, we have mods... My idea for borrowing from yourself would be you make out the loan and then turn it in to the mods for approval. They can reject the idea if they feel it is abusing the system or bad for the player, and punish abusers.

Tan, I know about the tithe, but 5% of the GDP is not the same as 10% income taxes. And besides that applies only to actual church members... ;-) Well you could apply it to everyone, in which case I would distribute "No taxes in Mexico" posters around... :-D

[Tanthalas]

ROFL DF, have you read my population numbers from the Religion thread... I think I ended up at somthing like 75% of my population being LDS.  Besides as I said I have no intention of implementing it, it would give me a higher tax rate than is felt to be acceptable and cause even more book work for me to keep track of it.

[Carthaginian]

DF... Mike said exactly what I insinuated- that the mods intentionally made it too expensive to fight long, drawn-out wars without mod approval. I support that myself, actually... the best war is one with a limited, easily-achievable goal.

[Desertfox]

A flat 10% tax rate on your church goers does not equal 10% of the GDP, and an LDS Church without tithes? That's heresy! Remember, not all of that money would be used for military purposes, which is the only thing we are tracking. All of our governments probably have around a 15% taxation rate, however the rest is used for other stuff like running the government and in your case for church stuff. ;-)

This new rule doesn't exactly mean long-drawn out wars, heck most scenarios I envision it being used wouldn't even be at wars. See my example, sh*t happens and sometimes you just need that extra little bit of cash.

[Darman]

I'm starting to be drawn more over into the idea that borrowing from other nations and being able to store away money from year to year are the best ways to go about government finances, be they budget surpluses or deficits. 

[Tanthalas]

A flat 10% tax rate on your church goers does not equal 10% of the GDP, and an LDS Church without tithes? That's heresy! Remember, not all of that money would be used for military purposes, which is the only thing we are tracking. All of our governments probably have around a 15% taxation rate, however the rest is used for other stuff like running the government and in your case for church stuff. ;-)

oh I still plan to have Tithing, im just not planing to include it in any sim budget, I may with moderator aproval have a seperate budget that pays for things like Temples, Churches, Missionary funds, Hospitals stuff like that.