#WT50 Feedback on Income Tax

149 messages · Page 1 of 1 (latest)

bright whale
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Time for this one as well. I'm already aware about the calculation difficulties some people have and that the 40% expense one (which I wasn't ever a fan of) caused some people to overspend due to the situation of a ticking tax being new.

What's your feedback?

naive maple
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I think the implementation this cycle had some issues. I want to start with thanking the GMs who and the federal government that worked to make the system functional and address the inevitable issues that come with something this new.

The system is complex and at the start when we could only deduct 40% of the expense it created a constant need to do !rate for people to figure out what they where gonna pay and but there where still the issue that the !rate only showed your current rate and it was still some guessing game what the future would be.

I think the concept can be tinkered with and get a better transparency for the players so they don't end up underestimating the tax burden they will have and end up in debt.

As a whole I think it has potential to be a better system and as mentioned on the main White Tiger a 100% deduction would open up for everyone to become the trader role which would be good for everyone!

I have an idea for a profit tax(100% expense deduction) next cycle if I mange to snag a MP slot if we are allowed to try it out again. Would hopefully be easier for the general citizen to understand and not have to constantly do !rate and start the guessing game.

topaz plaza
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I personally don’t like the system. While I understand its intent and potential benefits, it makes pricing feel so unnecessarily complex. One day my prices might be higher because I’m in a different tax bracket than the other and I’ve constantly got to be aware of that so I’m not losing money or just breaking even.

I’ve had a few times this cycle where my company friend has had to change prices because I’ve set them too low, and in this result, I’ve decided to not even bother with setting store prices.

Maybe I’m just not as educated in the financial sector as others are, less experience with tax rates etc., but to me it seems unreasonable to require people to constantly check their tax bracket to adjust prices when this distracts from actually playing the game

cosmic mulch
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From implementation perspective:
Negative-ish:
The law is overwhelming to understand, especially for inexperienced players with the eco law system (this isn't due to the way this framework was it's written, rather how complex laws are written in general). It takes a lot of time to process it, and presents various opportunities for errors (as evidently the first 2 weeks subtraction of UBI overcharging the poorest, which wasnt the intent).
Takes a lot of time to teach and explain concepts of progressive income tax, especially if the player comes from a country that uses static tax. UK has very similar tax system, for years, yet regular people here still dont understand it. So it will take numerous cycles to get used to. The time that goes into the tax, is taken away from other projects.
It felt really hard to balance due to the significant difference of player base, Some play 12 hrs a day and achieve 5 digits revenue, some barely survive. Deducting more expenses tightens the amount that can be taxed, which results in smaller brackets, which makes the spread look top heavy and people perceive they will always be on 50% tax, which makes them artificially increase prices and drive inflation up.
i personally found it hard to budget gov income - still do as there are so many more factors when it comes to projecting the tax, making simulations.

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positive-ish:
It's nice that it allows the top earners to contribute more (UK as a benchmark, top 1% pay 30% of taxes, top 10% pay 60% of all taxes).
It really incentives the government to spend money back into the economy ASAP and be braver;
It gives opportunity to boost struggling industries or create specialised support programmes - for example we could have given gatherers 100% expense count on seeds, when the tax was 40% expense, which would have offered a form of support. Im sure other opportunities can be explored;
It gives Trade guild more to do if they want to engage - they can offer guides, government can refer people as it more complicated. It created more RP opportunities for more servises to exist together.
Brings people memories and back to school - im sure we all miss progressive precents, and I felt young again 😂

topaz plaza
bright whale
# cosmic mulch From implementation perspective: Negative-ish: The law is overwhelming to under...

Which country does not have a progressive income tax? Even the US one is progressive. I don't know a european country where it's not progressive either, it's kinda the gold standard, just differing in the details. I guess they refer to company tax which this precisely is not supposed to be.

We could always have respective documentation on how the tax works, the goal this cycle was kinda to get it to work at all in a basic form.

Income tax likely at the start failed one of it's main goals - basically being near irrelevant to be considered by "some barely survive" players, due to their taxation being respectively low. The fact that the real money makers feel like they are permanently at the 50% tax bracket is actually intended and is how it works for the top 10% people irl as well. That is something they need to psychologically adjust to and not a flaw of the tax system.

The market effects seem notably psychological as well, Valfreya recently suggested if rates above 50% could be permissible, given it seems for some people the desired effect wasn't visible too much with them still swimming in money despite no necessity. If their pricing considerations lead to inflation, it is likely because they are used to having big numbers left, which the system precisely does not intend - so an even higher tax rate might be deterrent to do that, as returns are so diminishing it's not worth it.

Generally, my original thought with income tax was that it naturally only has little effect on actual prices and only insofar that people depending on their goals naturally can offer some goods slightly cheaper if they don't plan on making tons of money for their investors big plans.

A income tax however is generally not a tax that gets calculated into sales like a sales tax would with being distributed to buyers 1:1, given it is levied on results and calculation mostly is part of expected profit after tax, which IRL companies have a desire due to non-immediate deductible investments and obviously shareholder payments - both things that in Eco do not exist in that form. Companies would usually majorly consider EBIT / operating profit as the general success scale.

That however wasn't mirrored well with too low expense rate. Inhowfar that can actually work in Eco, no idea.

In any case, the tax seems to have worked sufficiently fine to get a Phase II testing where the original flaws are already ironed out to see respective effects from the start again.

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The usage of different expense scales would indeed be a useful government mechanic for steering. But inhowfar that is actually viable I'm not sure - too low general expense ratings have detrimental effects.

cosmic mulch
bright whale
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I would make a joke now, but I refrain from that.

cosmic mulch
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its great if ur top 1% ^^

bright whale
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Generally it seems the government dealt with the difficulty extremely well, so there is nothing but respect from me. Retention values didn't plummet either.

Also the increased complexity allows unlimited flexibility. It would for example be actually possible to mirror the investment-deduction-over time and have a 100% expense rate going along with it. The easiest way would just be pooling investment expenses and deducting them over a number of days.

In the end, I was aware that transparency will be the biggest difficulty, though the success is rather measured in if tax burden is actually distributed better and makes low-income players have a better time while government having sufficient revenue and large-income players still getting to get all their goals done, just not with that much leftover money.

bright whale
# cosmic mulch its great if ur top 1% ^^

No, I just don't consider countries european when they don't share the values of the european charta they signed: "Contrastingly, in 2024, Bulgaria's parliament prohibited the “propaganda, and promotion of non-traditional sexual orientation and/or gender identity other than the biological one” in schools." So Hungary is out as well dennis

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cosmic mulch
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its slowly getting there 🙂

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i experience it first hand 😛

bright whale
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After reading the post it seems like it goes the other direction, given acceptance went up a lot and then they do the opposite in parliament dennis

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Being "poor" is not really a concern for me when it comes to europe. It makes things difficult, but that's what we have big brain politicans for.

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In the end goal is kinda to have everyone equally wealthy.

bright whale
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However, I'm not sure how much percentage of players is from Bulgaria. I would assume the vast majority is from western EU / US, so the vast majority should be used to progressive taxes.

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Even the down-under people have a progressive one 😄

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Heck, even Japan and Korea!

cosmic mulch
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In UK, I can promise you no one under 25 has any clue how their tax works, some of the parents also still believe its better to make £49,999 than £50000 as it will bump you into the 40%

bright whale
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I just found it interesting that so many seemingly claimed to not be used to the system, that's all.

bright whale
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I would expect it being part of education as well, tbh.

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That people can't read the laws, especially tax laws is very understandable. But we have a cool amount of information online and in paper for Germany on how things work, there is whole parts of governments dedicated to.

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And it's kinda part of class 7 - 12 education as well.

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I actually wonder if any other server has a income tax, would like to ... spy.

sudden tundra
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I don’t know if it was brought up but some of the confusion in pricing can be attributed thanks to how income tax and corporate tax is different. Corporate tax mainly being a tax on the profit a company makes and is generally flat where income is a tax on the take home pay of the individual and is progressive. Companies wouldn’t need to adjust to a progressive taxation because they just have to know the corporate rate, which is often a flat rate. Not bashing the income tax. There’s a limit in eco because of how simple it is. It just so happens that simple nature can lead to issues.

bright whale
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Yes, I am aware of that and talked about why we don't do that in the other thread, in a society where everyone is a company, noone is.

open estuary
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I feel i am a pretty experienced player and I have found it quite confusing and complicated. It has made setting prices a nightmare, I have been anywhere from 20-40% tax. I spreadsheet all my crafts so it's easy to calculate it but I shouldn't have to readjust my prices constantly so I have just been slapping on the 40% tax as default

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It seems a lot of the recent changes to the server have been to help casuals and new players and try and improve player retention, the nerfing of housing, slower skill release, VI ban etc. adding in a very complicated tax system seems the opposite of what the server has been aiming for

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Was this change to try and make the government more money or punish people who made more money? As all tax I just factor it into prices so I feel my income wasn't as effected it just inflated the price of my goods

bright whale
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The prior tax system put a high amount of taxation burden on low-income players, while the main taxation burden should be on the high-income players.

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And as noted, you are not supposed to calculate income tax into your prices as you would with sales tax. (Though if done non-excessively, it allows other people to get into easier competition)

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So I guess I'll just allow higher tax rates next cycle so government has the option to combat that psychological issue with heavily diminishing returns if they want to try that.

bright whale
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A sales tax just automatically puts the burden on the buyer and hence the people that get many sales (and as such are high-income players) have barely any issues to get anything and everyone else has major issues to do so. Income tax changes that so the tax burden is on those that make those sales, no longer on those that don't get them.

hazy sluice
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i think the tax initially was not working right and this was a loss of some confidence in it, but as things got worked out and improved, and as people started to learn how it works i really liked it.

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one of the criticisms i see is that the law is hard to understand, but the system is new and many times new things take just a little time to get used to

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the most important feature of the law is how it directly incentivises you to spend your money

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i cant understate how important i think it is to give players good reasons to spend to keep the economy moving and money changing hands

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If i am a miner/smelter for example its not a huge deal if i go buy some concentrate instead of mine it myself. The reason is that cash i spent gets deducted from the future earnings of what that crafts into

bright whale
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Well, that's the hoped-for side effects we'd like to see.

brazen sparrow
ripe iris
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With all the different taxes that are in different amounts in each cycle, I'm for an obligatory !tax command that the government must set up for players to see for what and how much they are taxed. Not like the !rate command but and listing the taxes in effect and what they do.
Alternatively Signs with the info in every town.
Even involved players miss taxes and changes to them all the time, the experience for more casual players has to be a nightmare in that regard.

naive maple
# bright whale And as noted, you are not supposed to calculate income tax into your prices as y...

I have seen this statement been mentioned so many times now from both you and other GMs and it's just false and misunderstood. You always have to account for income tax in your sales price, without doing this you will end up in debt like so many did in this cycle. If a mechanic buys resources for 100 euro and wants to sell that you have to account for the income tax. Lets assume a 50% income tax it needs at least an increase to 200 euro to take make back the mechanics investment. There is not difference between sales tax and income tax when it comes to the effect of having to recoup your investment with the sales price.

It is only when you have a profit tax that most corporate tax systems uses you can move it out from the sales price to some degree and get the effect that you seem to want.
As long as we have the option to not have 100% deductions on expense an income tax will always just be an income tax and we need to consider it in our pricing else we risk not recouping our raw production cost for that item ad the point of sale.

bright whale
naive maple
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Thats for the business total revenoue. If we ignore the fact that some stores have items they lose money on to get you into the door.
When you look at item to item price you always account for that 20% you are not allowed to deduct

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in your 80% example

bright whale
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Profit taxes do not have everything deductible, there is indecutible components and such that are only deductible over a long time frame - which is what I would suggest the government to do in conjunction with 100% deductibility.

cosmic mulch
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(current deduction is 90%) flies away

bright whale
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Even less of an issue.

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I just can say that when it ever came to another court case, the likelyhood of the highest ever reached tax rate being applied as costs to prices would be very unlikely to be accepted as reasonable costs. But we seem to have a somewhat effective trading guild that just deters high pricing by opening threads 😄

naive maple
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As long as you get it back in the end and its at 100% we can ignore the tax in the sales price. It might change the cash flow but it wont impact the end profit. But anything less then 100% then it has to be accounted for in the sales price because its a cost for the store and if you dont account for it you will quickly run out of business

Takes Stans number as an example. Lets assume 20% flat income tax
If I have an item that cost me 100 euro to make. 90% of that was from logs, iron bars and stones which the government gives me a full deduction for but It wont deduct the food cost I had of 10%.
That means i need to at least sell my item at 102,5 euro to make back my cost. (100-90=10, 10/0,8=12.5, 90+12.5=102.5)

As you see the missing 10% must have an effect on the sales price. The less the number is from 100% the more of an effect it will have. I am not denying that a 90% deduction will have less impact then the standard 10-20% we had as sales tax but it will still have to be evaluated in the sales price.
If you as a player just thinks that it will be covered from my profits margins thats good enough for the player at 90% but when we had the low 40% deductions that's a critical error and could have been the though process for some of the people that ran into debt

bright whale
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Yes, the missing number, people here however stated they apply just the maximum tax amount as if it was a sales tax, which is just incorrect.

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In your example they had applied 50% income tax on the price, to sell for 150 + profit margin.

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That is obviously not going to be considered reasonable cost.

naive maple
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That effect i fear comes more from the guessing game of you don't know what your !rate number will be in the future when your past income will be taxed.

Our own company had to do that this cycle but I also understand our company is not the typical income. We just saw the income tax as a 40% sales tax but we got a rebate/kickback of 16%(0,4*0,4=0,16= on anything we bought. The endeffect is the same as if we have accounted it as an income tax

bright whale
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And it is fully irrelvant to the actual problem at hands which is related to the deduction percentage, not the actual income tax percentage.

cosmic mulch
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if you get to the 40-50% effective tax with 90% reduction, you must already be operating on extremely high profit margins, at which point you can indeed ignore the tax ...

bright whale
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And that's all I meant.

cosmic mulch
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were talking 300-500% profit

naive maple
# bright whale That is obviously not going to be considered reasonable cost.

That is correct but then I think it woudl be better to inform them to account for it the correct way, instead of saying dont account for income tax in your salesprice. What happens if we have stated dont account for income tax and then the next government does a 0% expense deduction. Then we will have people who will be doomed before it even started

bright whale
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Basically, the income tax itself can never be considered costs when it ever comes to a court case. The non-deductible part of expenses can be.
But people here constantly stated they apply the income tax itself as a cost on top, not the non-deductible expense part calculation.

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Anything you add to offset the actual income tax is part of your profit margin, not your costs and as such has the respective consequences for the pricing legislation.

naive maple
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My sales price is
Cost+profit=sales price
Where ever you input the the tax implications either in cost or profit side it will effect the sales price

bright whale
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Huh? If for a cost of 100 bucks you add 50% income tax as if it were a sales tax you get to 150 bucks and proceed to add the profit margin.
However, if only 10% of the 100 bucks are not deductible you only need 110 bucks to have your costs in if you are taxed 50% on the proceeds from that sale. (You ask for 110 bucks, have a cost of 100 bucks for it and pay 50% tax on the 10 added bucks and the 10 bucks that aren't deductible)

The calculation as if it was a sales tax gives unreasonably higher cost amount. The statements suggested the price gets the raw income tax value slapped on as if it were a sales tax and only when doing so any notable inflation can happen. Slapping the actual cost of non-deductible expenses on it, is not treating it like a sales tax but normal cost calculation.

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"I feel i am a pretty experienced player and I have found it quite confusing and complicated. It has made setting prices a nightmare, I have been anywhere from 20-40% tax. I spreadsheet all my crafts so it's easy to calculate it but I shouldn't have to readjust my prices constantly so I have just been slapping on the 40% tax as default"

naive maple
bright whale
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I always said that 40% deduction makes no sense and shouldn't be necessary given our pre-cycle tests on income generation.

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But yes, at 40% deduction and 50% technical tax you'd ask for 150.

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That was however not the presented case I answered on

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And it's not bad if 50% tax people do that calculation, as a person with only 10% tax could have sold for like 30 bucks less, making profit where the 50% tax guy just breaks even. (Which was one of the hoped for effects - they now have an angle for offering a better price or at least offset higher costs due to less experience or other practical issues)

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But if people generally just slap the income tax amount on, it's going to inflate at high deductions

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So yes, you did nothing I considered wrong lol

lyric surge
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Yeah 40% was probably a bad choice. I had reasons to think otherwise, but not worth defending it. Lesson learned for future I hope.

bright whale
# bright whale And it's not bad if 50% tax people do that calculation, as a person with only 10...

A flat corporate tax cannot do this, everything then is up to the company (or subsidies, as are very common). IRL that's fine, in the game it obviously doesn't work to compete (if there weren't issues I wouldn't have tried to test this to begin with). So there is a government given advantage in taxation costs and the fact that a much higher part of government costs are actually paid by people that have success. (Market intervention to make people a bit more competetive + establishing more fairness) The tax would allow finetuning in many ways to support specific people without manual subsidies as well.

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IRL there is also support programs that basically give you more to deduct from taxation, instead of just outright money. Those could also be used here.

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It opens a multitude of new opportunities to try out

lyric surge
bright whale
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Some countries even have "no taxes for three years" and similar deals.

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Even that could work.

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And when I marry the most beautiful fake prince on the server and adopt kids, we all get family deductions dennis

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But yeh, I had hoped that governments further into cycles would come up with such ideas, given the tax itself now ties to actual economic power in opposite to sales taxes, which would allow a multitude of government manipulation that is rather easy to get in line with equity clause.

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(Like not this, but cycles once it establishes)

lyric surge
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What is the metric for success you reference? Raw income? Taxable income?

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I'd argue raw income is the better metric, as it is tied to economy of scale and makes static costs like skills / housing less burdensome.

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And is divorced from tax policy

bright whale
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Another potential thing would then be to reform VBI into a support system that ties directly to taxes and hence is more tied to participating in the market, granting advantages there for competetiveness, instead of just being flat money payout that feels like social benefits.

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And company tax would also need another look, especially if VI restrictions are tried in a taxation approach.

lyric surge
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OK I'm done with my forking comments 🙂

bright whale
# lyric surge What is the metric for success you reference? Raw income? Taxable income?

Metric stuff is for the smart brains in the GM team, I mostly want to monitor how it actually feels to people that so far had the short stick when it came to competetiveness options and actually gaining income. In the end success of this tax will be more likely to hang on feelings than metrics. You can already see that with the transparency concerns and some people just slapping raw percentage on costs. It only works if it's accepted.

bright whale
lyric surge
bright whale
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This also means that the first two weeks are most key, given people left now are residents and not too much the target group of the changes - other than if people stayed longer due to having a success feeling they didn't before. Hence I hope in phase II testing without the 40% deduction we may see more.

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And if Valfreya thinks she can make it more understandable on top, that can only be positive 🙂

cosmic mulch
bright whale
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That is the desired outcome for low-income people, the tax not really being a burden and allowing more competetive pricing which could split sales a bit better. If that leads to more success for some people so they switch tax brackets, that is a success and the additional calculation necessary is just a level up additional task.

brazen sparrow
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I never had a problem, barely paid attention to the tax, and felt like I wasn't taxed enough when bringing in large amounts of money xD

lyric surge
bright whale
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Though I don't know if MP salary was made taxable - so you are likely not the experience I seek for either 😄

cosmic mulch
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Its taxable as far as im aware

lyric surge
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I'd like to see effective tax rate VS raw income for the 40% deduction and now 90%. I can help if that's of interest to anyone else

bright whale
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I just found that 40% is simply too low for success in any area

lyric surge
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I guess if UBI is removed from deductions that helps the curve, though I'll likely file a court case on that in a less stressed cycle.

bright whale
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Like, as a government, I would not fund razorlance's tries to get the highest food quality number.

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If and how that is possible to actually represent in Eco - no idea.

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It's all brainfarts.

lyric surge
bright whale
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Tax deductibility always has the issue of things being deducted you want to disincentivize or not actually pay for as you consider it "your private fun".

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IRL with tax papers that is easy to do, automation unfortunately probably can't do it.

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But I basically would not give deductions for things like razorlance trying to get maximum food skill points or someone building five beach villa's.

sudden tundra
bright whale
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Both is not really necessary to play the game and as such should be part of the things you pay from your profit, not get deductions from tax for.

lyric surge
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That the policy would be a failure / not equitable*

bright whale
lyric surge
brazen sparrow
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effective tax rates currently range from 1% - 34%

bright whale
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In the end, this tax will need some compromises to be made as well, I didn't go in expecting it will just magically solve all problems as part of a brainfart I had.

lyric surge
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To be a success imo

bright whale
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But detail level on effective tax spread also mustn't be super deep - if it somewhat does what is expected even in just like four groups of "poor" "average" "rich" "super rich", that would already be perfectly fine success.

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(And the super rich group is probably not achievable together with a rich group at 50% maximum tax)

lyric surge
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True, and what I saw earlier aligns with the real world where...

lyric surge
lyric surge
bright whale
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Yeh, just was an example of things I don't think government should indirectly pay for by lower taxation. Chasing the big numbers is a private endeavour, so to say, it's not necessary to play the game as intended.

cosmic mulch
lyric surge
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I still think total tax paid should be it's own currency that is track able. Call it the "High Score" currency

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Different thread though

brazen sparrow
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only average hourly income and effective tax rate are updated

lyric surge
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Yeah it's data from days ago. It stopped being updated, but the accounts still exist

bright whale
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I can offer some Holy Roman Empire income

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sudden tundra
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Ireland could always use some.

lyric surge
brazen sparrow
bright whale
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I have no idea what to do with 1000 gold a month in CK3. I was rather poor, but when I switched to administrative government income just tenfolded.

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Anyway, not the point of here, sorry 😄

lyric surge
brazen sparrow
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she's pretty vertically integrated