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Corporation tax

Simcountry: Simcountry Bulletin Board  Corporation tax


Monday, September 15, 2003 - 04:30 am Click here to edit this post
I've always thought the game default of 30% tax and 80% on percent of profit a decent starting point in this game.

In the Free worlds and here I use 80% tax and 0% on profit but that's more of a habit than anything.

I had two basic reasons for my current tax rate:
(which are outdated but I've got other concerns at the moment)

1. Most free countries I encountered had alot of CEO corps in them. Whatever the rate was going to be, they were designed so ALL corporations (State & Private) contributed to the country income equally.

2. To keep a handle on corp. market value.

From all the indications I have the material penalty is by-passed by making sure all material your corporations buy is purchased by contracts. Corporation market value is not a consideration if you insure you have that covered.

GR makes this easy however, you can only get consumption contracts for what is normal use at 100% production. If your production is 121% then you are using 21% more material than you have contracted. This has to be made up or what material you do buy on the open market with a high MV corp will once again work out to twice as much money.

You can either manually write and accept contracts for that 21% or uncheck auto buying for the corps and deal with it when shortages appear. Remember anything you buy on the open market will be subject to the penalty so some reserve corps to fill the gap would be needed.

If you have 100% of your needs already contracted then production won't drop below 100% should you have shortages, but your corp will never automatically buy so if you don't do it, production will always be limited due to lack of supplies.

The lower the tax rate, the higher the market value and visa versa.

The worse thing you can do is keep jacking with your tax rate (been there done that). If you have a low tax rate and raise it, your corps will of course pay you more money .. but if you are doing alot of upgrades or it's not selling 100% of production at a profit you'll drive it into bankruptcy and cause it to close.

If you have a high tax rate and lower it, the corps have already overpaid based on the current rate and it can be several months or even a year before you see another dime from them.

If you are in a position to supply all your corp material needs I'd recommend a low rate (which very few people are). If you are not, or have alot of CEO owned or public corporations I'd recommend a high rate.

Either way I'd recommend settling on one rate and dumping the percent of profit either immediately if going high, or ramping down slowly if you are remaining low.

Either way unless you want corps going public at some point you will have to regulate thier market value.

If your taxes are high you can do it with loans, production levels, percent of profit and salaries, if they are low you can raise taxes, or really any of the above and probably some I forgot to mention.

If you don't go nuts with upgrade (which I usually ram down thier throats at 3 quality and 3 effectivity per month) corps do just fine at 80% taxes 0 percent on profit.

You can even run them to 100% tax and 100% on profit if you are a real tyrant but they are extremely fragile and will close if you sneeze in the same house as your monitor and take eons to get out of debt.

What you need to do though is pick a rate you aren't going to change and give things time to work.

I'd recommend anything in a range of 30-80% tax and 80-0% of profit. The higher the tax the lower the percent of profit.

You are shooting for a balance on taxes where your country receives enough income for operation while allowing your corporations to grow.

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