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Negative Income Tax VS Flat Tax

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Fremen Talla
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Post: #1
Negative Income Tax VS Flat Tax

Hi all.

Currently I am playing as a Russia template, which seems to mean that I have a basically resources driven economy. Judging from that, I probably should pursue an export driven growth strategy rather than stimulating domestic consumption. However, I was wondering, would Negative Income Tax or Flat Tax be better for this? I was leaning towards NIT because it seems socially fairer, but it seems t stimulate domestic consumption more than exports, and I'm not sure if my Money Supply is too low. It's higher than Real GDP, but not the GDP on my details setting.

So which one should I do. Is an export driven growth strategy better for this template? Or should I pursue a more consumption and investment policy? If I'm aiming to pursue a model of progressive social policies through market mechanisms and private investment growth, should I introduce NiT or Flat Tax? Finally, idoes my Money Supply or any other factor in my state need to be altered before I embark on one of the two reforms?

Thanks in advance for the advice.

21.10.2015 22:24
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Helsworth
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Post: #2
RE: Negative Income Tax VS Flat Tax

From my experience, the NIT yields more net benefits than Flat Income tax. Typically, you should have your Money Supply & GDP in sink before doing the NIT, but Ars-Regendi doesn't specify what money stock the MS tab actually measures. If you want to encourage exports, the most efficient way is to increase excise (sacrifice domestic consumption to send net wealth abroad). Depends really on your goals & play-style.


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This post was last modified: 21.10.2015 22:35 by Helsworth.

21.10.2015 22:34
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Lord Alexander
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Post: #3
RE: Negative Income Tax VS Flat Tax

To receive the maximum benefit from the Negative Income Tax you need to first expand Money supply. Before the implementation of reform it should exceed the Gross Domestic Product, not just the Real GDP.

21.10.2015 22:54
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Fremen Talla
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Post: #4
RE: Negative Income Tax VS Flat Tax

Thank you both! I'll increase money supply and reduce interest rates next, as well as a small increase in excise tax. Thanks for the advice.

21.10.2015 23:36
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