Some many years ago, during the reign of DOS and Windows
3.1, I actually stooped to purchase a game off the shelf in a computer
store. It was called Empire.
The basic idea was to build a nation from a wilderness. The play was set in a land region with no
facilities at all. The player had a
small limited amount of money to start the settlement. The plan was to create a settlement and
establish trades from which an economy could be created.
It was a fun game to play.
If the player failed to keep Caesar happy the player wound up as a slave
rowing oars in the galley of a Roman ship.
If you managed to keep Caesar happy you were allowed to continue to
build your nation. If you succeeded in
building your nation well you were eventually offered the seat of Caesar by a
happy population.
One of the lessons I learned from this game was the negative
effect of taxation. During the course of
one game it came to the point that I needed to raise cash for improvements and
an army for defense. So, I raised
taxes. The tax revenue actually started
decreasing as the population of the nation started decreasing. People were
moving out but I did not realize it. So,
I raise taxes again and again. Finally,
riots broke out all over the place in retaliation for the extreme taxes. The riots had to be quelled and that too cost
money, for containment of the people and to rebuild the damage. I found the best solution to the discontent
was to lower the taxes. As I brought the
taxes back in line with the original starting point the population started to
increase again, the disturbances ceased and revenues started rising. I found that by increasing the population
through entertainment and trade the economy would produce more tax revenue even
though I was not raising taxes. This
became a hugely successful strategy. So successful in fact that I could at
certain points lower taxes from the starting point with greater returns as the
economy increased in trade.
Yes, it was only a computer game and one might question the
basis for economic reality. None the
less, it was a working experience which I never forgot. It was great to reach
the level of Caesar.
2 comments:
I posted this at one of your older posts. I thought it deserved some more recent attention:
==
The central issue of our times:
The power to tax is the power to enslave.
For what are you willing to be a slave?
For what are you willing to enslave others?
Pass it on. Claim it as your own.
http://powerandcontrol.blogspot.com/2012/06/slavery.html
it is referred to as the Laffer curve. Basically if you set your tax rate at 0% or 100%, your revenues will be zero. So the optimum tax rate is somewhere in-between.
Some morons will argue that if you set your tax rates at 100% you will have something above 0 as revenues, this may or may not be true, but i think we can all agree, it will be well below the amount that you would receive at 70% or 50% or 30%. The point is, if you wish to raise revenues by taking from producers, you cannot take so much as to demotivate the producers from producing. You also have to make the cost to pay the tax, less than the cost to avoid the tax, otherwise you get people willing to pay 10% of income to avoid an 11% tax. To increase the spread on this formula you enter jail time and public disdain into the equation, so that people are willing to pay more of a tax, over and above the cost of avoidance, just for peace of mind. Extortion at its most refined.
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