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Low Salaries (White Giant)

Simcountry: Simcountry Bulletin Board  Low Salaries (White Giant)

Sun Tzu (Golden Rainbow)

Thursday, June 12, 2008 - 01:33 am Click here to edit this post
Low vs. High Salaries is primarily a comparison between cost and benefit.

When considering what to set your salary level as you must consider the following items:

Corporations have an apex of profitability. This point is reached when the increase in salary costs is equal in value as the increase in production. The higher the market price is above the base value, the higher the salary will benefit your corporation, but past this point I described, corporation profitability will go down and income from Tax and Profit Transfer will go down.

Income Tax is the second point to consider. This will raise the point at which the increase in corporation salaries will benefit your country.

Government Salaries are another point to consider. Though an increase in salaries will also cause an increase in Income Tax from government workers, the net amount paid out will always rise with higher salaries.

I'll give an example:

Say we have a 100 salary level, corporate workers are paid $600 and generate $1200 in products minus all costs other than salaries. Government workers will be paid $600 also. At this point, let us also say that SC charges 10% (not accurate) income taxes. So you will receive $120 (10% of 600 + 600) in income taxes, and $600 (1200 - 600) from corporations. This makes $120 in profit (720 Revenues - 600 Government Salaries).

Now lets say we make the salaries at 200 causing an increase in production of 40% and a 10% increase in the tax rate. Corporate workers will be paid $1200 and generate $1680 in products minus all costs other than salaries. Government workers will be paid $1200 also. At this point, lets say SC charges 20% (not accurate) income taxes. So you will receive $480 (20% of 1200 + 1200) in income taxes, and $480 (1680 - 1200) from corporations. This makes -$240 (960 Revenues - 1200 Government Salaries).

Obviously the example is simplistic and inaccurate, but it is correct in the principle behind my reason for putting low salaries. If government salaries were less in this example then the high salary would make a profit. If corporation production was greater and corporate salaries less, I would make more revenue at the higher salary, but the diminishing increase in production guarantees that this happens at some point.

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