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Forum General Why 0% Tax is Always Best (Little Upsilon)

Why 0% Tax is Always Best (Little Upsilon)

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Accordion_This (Little Upsilon)

All worlds
04 Mar 2011 10:17Link
If you are planning to run a CEO-based economy, 0% tax is always more lucrative than any other tax rate. Why?

Well, a CEO is always going to invest in a 0% tax country rather than a 10 or even 5% tax country. This is because he/she stands to make more money in the 0% tax country because there is no tax burden. So 0% tax is more useful than any other tax rate in attracting CEOs to your country.

You also make more money from a factor outside tax called "Country Resources Used" than you would ever make from tax, even if your tax rate is 100%. Here's an example from a 75% tax country:
(from Profit/Expenses of Corporation for 1 month)
Country Resources Used 1,435.57M SC$ (this is paid to the country)

(from Cash Flow Data for one month)
Tax Paid (to country) -191.39M SC$

So you're actually making 10 times as much money from the former than you are from ta
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Linebacker Six

All worlds
04 Mar 2011 11:00Link
If one is seeking outside investment, for whatever reason, then absolutely.

If one is using one's own CEO corporations, then not necessarily.
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NiAi (Little Upsilon)

All worlds
04 Mar 2011 12:47Link
0% tax is just to increase liklyhood of investment. But if you have a high welfare nation, even a tax rate of 10-20% can be quite tolerable (even thou we greedy CEO would LOVE 0% tax ofc).

Unless there is mathematical proof of 0% tax generating more income than like 5% tax, with same level of CEO investment, the tax discussion(tax break) is just a method of luring CEOs in, not a profit maximising technique.

Im yet to find a CEO refusing to invest cause' of taxrate of 10% or so, cause finding a active president with high welfare is worth sooo much more (as you know high welfare -> more production-> more profit).
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Danny Miller (Little Upsilon)

All worlds
04 Mar 2011 13:53Link
0% tax is best if you want other CEO's to invest.
However, if you good at running corps, I would suggest filling your country w/ your own corps instead.
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Accordion_This (Little Upsilon)

All worlds
04 Mar 2011 14:19Link
NiAi and Linebacker, you make good points. My argument, however, is still valid - avoid high tax rates if you want to increase investment.

Also, it's easier for a corporation to make a higher gross profit (and therefore more Country Resources Used) without tax, because tax lowers the capacity of the corporation to upgrade, pay workers, and purchase supplies. Lower tax therefore means faster upgrades and a faster return (possibly even a higher return).
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Danny Miller (Little Upsilon)

All worlds
04 Mar 2011 15:36Link
Corp salaries and the welfare index of the country directly affect the level of country resource payments, since that is based on the corps production. Corp taxes would not have a direct effect. High corp tax rates would probably affect the value of the corp and the cash flow as you have stated. Just my 2 cents.
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Red Dragon (Little Upsilon)

All worlds
04 Mar 2011 20:05Link
Countries which have many different CEOs will make very stable income, and CEO's corps in the countries must be different corporations. The countries also should have some good state corps such as FMU. In my own opinion, I would like to build my CEO in 30% tax countries with high welfare than in some C3s with poor conditions.
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swann_88 (Golden Rainbow)

All worlds
05 Mar 2011 00:49Link
lower taxes also help create a higher p/e ratio in corps allowing them to ipo faster
this applies to both ceo and country corps
so you can benefit from lower taxes even if you have no ceo corps