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  • Comment on Liam's article

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    Comment on Liam's article

    Postby Thadeus Laing » Sat Feb 15, 2014 3:37 am

    Liam,

    Your latest article on me and my plans for Aryasht, "Melanje wants tax-haven;
    attempts to seduce Aryasht" ( http://www.micronationhistory.info/?p=615 )
    completely misses the point and is incorrect. Please let this article be a fluke.
    Your journalism has previously been of high quality, which I have praised. But
    with this article, I cannot praise, I must criticize. And yet I will, by responding
    here and dissecting your words, no doubt give you a lot of free publicity, further
    popularizing your rag.


    Melanje wants tax-haven; attempts to seduce Aryasht


    I have no qualms with the headline. Though a bit of an
    oversimplification, it is factual and snappy.

    EDITOR’S DESK (CS) | In an attempt to evade the taxation regimes of the Standardised Currency and Unified Economy (SCUE) micronations in order to protect his personal fortune, Bastion Union-based economist Thadeus Melanje has proposed that the Shirerithian Imperial State of Aryasht position itself as a tax haven.


    You miss the point. That is not the reason I want Aryasht to be a tax
    haven. It is not just to protect my fortune, but everyone's. And not
    for greed, but from random acts of economic terrorism. I do not want
    to name names because there are certain nations and individuals who
    I think have hurt their nation's credibility with economics and yet are
    otherwise good leaders. Moreover, there about 3 main nations, all in
    the Bastion Union, that have frankly taken a nosedive in economic
    affairs.

    The proposal, which Melanje asserted would allow Aryasht to be a “place – like Switzerland – where people can put their money and not worry about it being seized or taken away without due process,” was among several relating to the economic development of the Imperial State. His primary goal is nonetheless the protection of his personal bank account rather than the healthy development of Aryasht’s economy.


    The protection of my personal bank account would be a side effect
    but it is out of the interest to protect everyone's private and personal
    bank accounts from a surprise 'gotcha' from the government of a
    nation or province is the main goal. Some semi-adult supervision is needed, in
    other words.

    If the Melanje proposal is implemented, Aryasht would levy no taxes on personal bank accounts held under its flag and there be no tax on inheritance or other estate disbursements. Bank accounts would be permitted to remain open ‘forever’, preventing funds in long-term inactive accounts from being seized by the government for recirculation. Also, by seeking its own top-level account with SCUE, Aryasht’s holdings would be protected from clawback by other governments, including the federal government in Shireroth. All of this works in Melanje’s favour, and indeed the favour of any other individual who has reservations about paying their fair share of the state’s expenditures.


    Well at least you manage to be astute here by reading between the
    lines of some of my past statements. Yes, I want Aryasht's bank account
    and economic system to be distinct from Shireroth's, in order to facilitate
    the protections that I so desire for Aryashti citizens and residents with
    regards to their bank accounts. I did not come out and state this so plainly
    before because I do not want to offend His Niftiness or others in Shireroth.
    Yes, this works in my individual favor, but again this works in everyone's favor
    as everyone will be much safer investing their money in Aryasht.

    Look, if someone asks me privately I will tell them right now in which nations
    their money is absolutely not safe. You see, there have been, instances and
    situations of concern in recent months. I have had money sucked out of one of
    my accounts without warning--but just prior I had, on a hunch, removed 99.9% of the
    money from that account (I left a token amount in the account for political
    reasons, so that it did not appear as if I was intentionally abandoning that
    particular nation). That is just one example. Another example: a well known
    leader of one nation has had, apparently, his bank account 'hijacked' by some
    unknown person or group, so that he unfortunately no longer even has access
    to his own money. Hijacked! Maybe even hacked! Unthinkable, but yet
    possible in today's declining economic climate. These are just two examples
    of the kinds of things I want to prevent.

    Melanje sweetened his underlying tax-haven proposal with a monthly allowance to each of the Prince of Aryasht and the Grandsire (head of government) in the amount of 1,000 Erb. A further maximum disbursement from the Royal Treasury of 5,000 Erb would be permitted during a single month, placing the total authorized cash flow from the government coffers under Melanje’s plan at up to 7,000 Erb per month.

    The allowances to the Prince and Grandsire (2,000 Erb per month total) are “quite large,” Melanje admits, though his words may not do justice to reality as the sum represents a staggering 28.5% of the government’s authorized monthly disbursements.


    There was a time when Andreas the Wise was MiniTrade of Shireroth
    when people were getting handed 2000 Erb bounties for the most
    basic of tasks. Now people are lucky to get even 5 Erb for a lot more
    work. The allowances for the royal leaders of Aryasht are high,
    but perhaps we have just lowered our expectations too far in recent
    years. The Prince and Grandsire together do the bulk of work in
    Aryasht, far more than most Bastion nation leaders, and should be
    paid handsomely for it.

    More concerning is that, at present, all SCUE account holders – private, corporate and government – based in Aryasht hold a combined 7,501 Erb. Implementation of Melanje’s allowances to these two individuals, plus his proposed spending cap for the state government, would quickly lead to Aryasht’s bankruptcy in just over a month (if one assumes the entirety of the 7,501 Erb is actually held by the government).


    Taxes (though small as they may be) and tariffs will replenish
    and restore the Treasury of Aryasht so that there will be a
    constant supply of funds for Aryasht to spend.


    With Melanje’s plan forbidding the levy of personal and estate taxes, as well as the imposition of business licencing fees, the state is likely to find itself irrecoverably in a financial downturn if implemented. Given that the only source of firm revenue for the state to avail of in an attempt to maintain solvency under Melanje’s plan would be through high taxation of the business sector, Aryasht’s economy would likely become one of the most destitute on Micras. This would likely precipitate monetary intervention by the Shirerithian government to ensure the state’s stability, resulting in further financial strains throughout the SCUE’s largest economy.


    I never said business taxes would be high, just allowed. When
    I was thinking of business taxes, I was thinking about 1% of assets.
    That is very small. Please do not place words in my mouth.

    Individual provinces of Aryasht other than Montauk will be able
    to set whatever tax rate they want for their internal governments,
    whether it be 0% or 100%. But I only ever envisioned any tax at the
    nationwide level in Aryasht to be about 3% at the very most.

    While Aryasht’s government would be bankrupt, its business sector contracting due to being over-burdened through taxation, and Shireroth’s taxpayers left on the hook to bail out the state, Melanje’s personal fortune would at least be spared under his plan.


    The decision to tax companies but not private individuals was
    not an easy one to make. But it had to be one or the other.
    Companies were decided to be taxes because, Aryasht is a very
    traditional society with vestiges of a landed gentry with a long
    history of inherited wealth. It was decided that it would be better
    not not to offend the all-powerful aristocracy of Montauk by taxing
    them; moreover, the aristocracy would be more willing to accept the
    taxation of abstract and relatively more historically recent inventions
    such as corporations. Yes I am at heart an academic; so I still have
    need of patrons, even as I am a royal Lord now. The Prince and Grandsire
    and the royalty of Aryasht have the power to implement my theoretical
    ideas for micronational economics, but they probably will not if I tax
    their riches away!

    Signed,

    Thadeus
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    Re: Comment on Liam's article

    Postby Theoaster Niladesh » Sat Feb 15, 2014 4:15 am

    Oh, c'mon, Thaddy, everyone knows you're just a greedy miser :rolleyes:
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    Re: Comment on Liam's article

    Postby Thadeus Laing » Sat Feb 15, 2014 4:17 am

    Theoaster Niladesh wrote:Oh, c'mon, Thaddy, everyone knows you're just a greedy miser :rolleyes:


    Remind me again why I made you Baron of Osterisla? Oh, yes,
    my daughter picked you as her husband and so I had no choice.
    Heaven help Montauk when you succeed me as Lord of Montauk.
    Hopefully you'll learn why economics is important by then.
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    Re: Comment on Liam's article

    Postby Theoaster Niladesh » Sat Feb 15, 2014 4:18 am

    Thadeus Melanje II wrote:
    Theoaster Niladesh wrote:Oh, c'mon, Thaddy, everyone knows you're just a greedy miser :rolleyes:


    Remind me again why I made you Baron of Osterisla? Oh, yes,
    my daughter picked you as her husband and so I had no choice.
    Heaven help Montauk when you succeed me as Lord of Montauk.
    Hopefully you'll learn why economics is important by then.


    Economics schmeconomics old man! =p
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    Re: Comment on Liam's article

    Postby Kaiser Trantor IV » Sat Feb 15, 2014 4:51 am

    Giles, shut up.
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    Re: Comment on Liam's article

    Postby Theoaster Niladesh » Sat Feb 15, 2014 5:22 am

    Kaiser Trantor IV wrote:Giles, shut up.


    Who is Giles, Your Niftiness? Do you want me to tell him to shut up for you? I think I would take great pleasure in that. :twisted:

    OOC: In case you want to say something to me OOC, CJ, simply prefix it with OOC.
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    Re: Comment on Liam's article

    Postby Liam Sinclair » Sat Feb 15, 2014 5:37 am

    Thadeus,

    If you look closely at the article, it's classified under the Opinion section, as it is an editorial piece, hence the "flare" in its presentation, and it has succeeded in provoking further discussion of what I consider to be a short-sighted plan on your part. I would encourage you to share your thoughts in reply to the article on the website, as the CS readership extends well beyond the Bastion Union and others may wish to become involved in the debate. I would be more than happy to duplicate my following comments on the site to maintain continuity of the discussion there.

    In my opinion, your plan is far too likely to place Aryasht's finance in turmoil as you prohibit the state from accessing the primary source of revenue in micronationalism - personal tax/accounts. Most micronationalists that earn money in these economic simulations never spend it or move it or do anything useful with it, so when you say "no personal taxes", you block the Aryasht government from getting at the bulk of the funds accessible to it. That requires it to rely on business taxes to stay solvent, and this is not a realistic outcome in such a situation as (1) because most funds in the economy never move from personal accounts, businesses have limited access to capital, and (2) most businesses in a micronational economy are unable to generate any significant and regular capital from sales because most individuals decide not to participate in the economy. In essence, for the Aryasht government to even come close to solvency by relying on business tax, businesses would have to be overburdened with a significant tax rate on their income, which is less than motivational to the business owners or to those looking to become involved in the economy. Add to this that you want to give large, unviable, monthly allowances to the leaders of Aryasht, as well as a monstrously-underfunded credit-line to the remainder of the government via the Treasury allowance. Simply put, from what I see of your proposal, you would be the last person that I would ever want being a Minister of Finance (or similar position) within any micronation as your anti-tax stance would paralyze government finances, not to mention economic development period.

    I would have no problem supporting your desire for a tax haven, if your plan wasn't so blatantly bad for Aryasht, and so heavily-skewed against its very economic security.

    The protection of my personal bank account would be a side effect but it is out of the interest to protect everyone's private and personal bank accounts from a surprise 'gotcha' from the government of a nation or province is the main goal. Some semi-adult supervision is needed, in other words.


    So by removing the micronational government's (or to use the current example, Aryasht's) main source of revenue (taxation on personal income/accounts), you're aiming to prevent a 'gotcha' situation? Let me repeat that in slightly different words: by making it such that the government loses a significant primary source of income, you expect it to not have to undertake drastic actions, such as seizing the funds of inactive accounts, to maintain its solvency when it inevitably falls into chronic deficit?

    By paying a modest personal income tax or account tax, and by allowing long-term inactive accounts to be seized so that the funds can return to circulation, and possibly thereby provide actual economic benefit again, you would actually reduce the likelihood that the government would need to raise taxes or implement other revenue-raising measures. This approach comes closer to achieving your goal, and if those re-circulated funds from inactive accounts precipitated economic growth, you could potentially quite easily recoup your tax losses through investments and contracts. This is a small community and making an economic simulation work, let alone with some semblence of realism, requires that micronational governments generate significant per capita revenue. Your plan does not support this reality.

    Gotzborg takes a simple approach on the inactive account front that ensures that Thalers are kept in circulation in an attempt to maximize the potential of the economy for growth: if the entity is inactive for six months, the Royal Government seizes the funds in the entity's account, but on the understanding that if the entity ever does return to activity, it can apply to have all seized funds reimbursed. Those who return to activity have a safeguard, while the Royal Government still has access to a significant source of revenue to maintain a more sustainable cashflow that it can use to encourage economy development via being able to pay salaries, fund contracts, etc.

    Taxes (though small as they may be) and tariffs will replenish and restore the Treasury of Aryasht so that there will be a constant supply of funds for Aryasht to spend.


    As I said above, unless you're going to tax the few businesses in Aryasht dry, or the state government claws back the very little provincial tax revenue your plan permits on personal accounts ("very little" as most personal accounts would be at the tax-free 'national' level as per your tax haven plan), the state treasury cannot sustain 2,000 Erb a month being paid out to the leaders, let alone further government expenditures. There simply is not enough of a tax base in Aryasht today, nor would there ever be from business alone, to provide a constant and sustainable revenue.

    I never said business taxes would be high, just allowed. When I was thinking of business taxes, I was thinking about 1% of assets. That is very small. Please do not place words in my mouth.


    Thank you for the clarification. I can now confidentally say that Aryasht would most certainly be financially insolvent under your plan, as the state government would have access to only crumbs of Erbs to fund your 7,000 Erb a month series of allowances. 1% business tax on assets would yield only a laughable revenue to support such ambitious allowances.

    The decision to tax companies but not private individuals was not an easy one to make. But it had to be one or the other.


    It doesn't have to be one or the other. It can be both. In fact, it needs to be both to support your 7,000 Erb a month in allowances.

    You certainly have unique ideas on economic theory, but before you suggest a budgetary regime for Aryasht or any government, perhaps you should adjust your thinking from the theoretical to the practical and start at the key first step: identify your revenues, and then allocate your expenditures. If expenditures far outweight revenues, and you don't have the reserves to maintain solvency more than a month down the road, then either the revenues, the expenditures, or both need to be adjusted to make them realistic and sustainable.

    It's all well and good to want a tax haven in Aryasht. But that's not going to do you any financial good when your wider plans for the government's finances bankrupt the state government and force them to seized your funds in that wonderful "tax free" account you boast about. Instead of having your decisions influenced by the need to provide a firm, sound and sustainable fiscal plan for Aryasht's government, as is your role as Counsellor on Economics, you seem to be influenced by wanting to protect your personal wealth to the exclusion of all else. Your horde of SCUE units isn't going to be very useful when you've nose-dived the Aryasht economy to the ground by implementing your current plan.

    If you're so concerned about economies failing on SCUE, then be responsible in your role as Counsellor on Economics and build a sustainable economy for Aryasht by providing for a solvent government. If Aryasht's government cannot maintain solvency itself, no matter how much money people have in tax haven accounts located inside its borders, it's economy will nose-dive just like those other 3 main Bastion Union micronations that you alluded to.


    And yet I will, by responding here and dissecting your words, no doubt give you a lot of free publicity, further popularizing your rag.


    My "rag" doesn't require your free publicity, though I'm more than happy to provide coverage on the inane nonsense that you spout as economic "expertise" from behind your "Doctorate of Economics". If anything, the well-respected readers of the "rag" that is the CS can learn what not to do when it comes to micronational economics by following your lead.
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    Re: Comment on Liam's article

    Postby Andreas the Wise » Sat Feb 15, 2014 9:24 am

    Thadeus Melanje II wrote:There was a time when Andreas the Wise was MiniTrade of Shireroth
    when people were getting handed 2000 Erb bounties for the most
    basic of tasks.

    I'm sure this was a typo and you meant to say '200'. Just for the sake of historical accuracy. :doc:
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    Re: Comment on Liam's article

    Postby Thadeus Laing » Sat Feb 15, 2014 3:23 pm

    Liam Sinclair wrote:Thadeus,

    If you look closely at the article, it's classified under the Opinion section, as it is an editorial piece, hence the "flare" in its presentation, and it has succeeded in provoking further discussion of what I consider to be a short-sighted plan on your part. I would encourage you to share your thoughts in reply to the article on the website, as the CS readership extends well beyond the Bastion Union and others may wish to become involved in the debate. I would be more than happy to duplicate my following comments on the site to maintain continuity of the discussion there.

    In my opinion, your plan is far too likely to place Aryasht's finance in turmoil as you prohibit the state from accessing the primary source of revenue in micronationalism - personal tax/accounts. Most micronationalists that earn money in these economic simulations never spend it or move it or do anything useful with it, so when you say "no personal taxes", you block the Aryasht government from getting at the bulk of the funds accessible to it. That requires it to rely on business taxes to stay solvent, and this is not a realistic outcome in such a situation as (1) because most funds in the economy never move from personal accounts, businesses have limited access to capital, and (2) most businesses in a micronational economy are unable to generate any significant and regular capital from sales because most individuals decide not to participate in the economy. In essence, for the Aryasht government to even come close to solvency by relying on business tax, businesses would have to be overburdened with a significant tax rate on their income, which is less than motivational to the business owners or to those looking to become involved in the economy. Add to this that you want to give large, unviable, monthly allowances to the leaders of Aryasht, as well as a monstrously-underfunded credit-line to the remainder of the government via the Treasury allowance. Simply put, from what I see of your proposal, you would be the last person that I would ever want being a Minister of Finance (or similar position) within any micronation as your anti-tax stance would paralyze government finances, not to mention economic development period.

    I would have no problem supporting your desire for a tax haven, if your plan wasn't so blatantly bad for Aryasht, and so heavily-skewed against its very economic security.

    The protection of my personal bank account would be a side effect but it is out of the interest to protect everyone's private and personal bank accounts from a surprise 'gotcha' from the government of a nation or province is the main goal. Some semi-adult supervision is needed, in other words.


    So by removing the micronational government's (or to use the current example, Aryasht's) main source of revenue (taxation on personal income/accounts), you're aiming to prevent a 'gotcha' situation? Let me repeat that in slightly different words: by making it such that the government loses a significant primary source of income, you expect it to not have to undertake drastic actions, such as seizing the funds of inactive accounts, to maintain its solvency when it inevitably falls into chronic deficit?

    By paying a modest personal income tax or account tax, and by allowing long-term inactive accounts to be seized so that the funds can return to circulation, and possibly thereby provide actual economic benefit again, you would actually reduce the likelihood that the government would need to raise taxes or implement other revenue-raising measures. This approach comes closer to achieving your goal, and if those re-circulated funds from inactive accounts precipitated economic growth, you could potentially quite easily recoup your tax losses through investments and contracts. This is a small community and making an economic simulation work, let alone with some semblence of realism, requires that micronational governments generate significant per capita revenue. Your plan does not support this reality.

    Gotzborg takes a simple approach on the inactive account front that ensures that Thalers are kept in circulation in an attempt to maximize the potential of the economy for growth: if the entity is inactive for six months, the Royal Government seizes the funds in the entity's account, but on the understanding that if the entity ever does return to activity, it can apply to have all seized funds reimbursed. Those who return to activity have a safeguard, while the Royal Government still has access to a significant source of revenue to maintain a more sustainable cashflow that it can use to encourage economy development via being able to pay salaries, fund contracts, etc.

    Taxes (though small as they may be) and tariffs will replenish and restore the Treasury of Aryasht so that there will be a constant supply of funds for Aryasht to spend.


    As I said above, unless you're going to tax the few businesses in Aryasht dry, or the state government claws back the very little provincial tax revenue your plan permits on personal accounts ("very little" as most personal accounts would be at the tax-free 'national' level as per your tax haven plan), the state treasury cannot sustain 2,000 Erb a month being paid out to the leaders, let alone further government expenditures. There simply is not enough of a tax base in Aryasht today, nor would there ever be from business alone, to provide a constant and sustainable revenue.

    I never said business taxes would be high, just allowed. When I was thinking of business taxes, I was thinking about 1% of assets. That is very small. Please do not place words in my mouth.


    Thank you for the clarification. I can now confidentally say that Aryasht would most certainly be financially insolvent under your plan, as the state government would have access to only crumbs of Erbs to fund your 7,000 Erb a month series of allowances. 1% business tax on assets would yield only a laughable revenue to support such ambitious allowances.

    The decision to tax companies but not private individuals was not an easy one to make. But it had to be one or the other.


    It doesn't have to be one or the other. It can be both. In fact, it needs to be both to support your 7,000 Erb a month in allowances.

    You certainly have unique ideas on economic theory, but before you suggest a budgetary regime for Aryasht or any government, perhaps you should adjust your thinking from the theoretical to the practical and start at the key first step: identify your revenues, and then allocate your expenditures. If expenditures far outweight revenues, and you don't have the reserves to maintain solvency more than a month down the road, then either the revenues, the expenditures, or both need to be adjusted to make them realistic and sustainable.

    It's all well and good to want a tax haven in Aryasht. But that's not going to do you any financial good when your wider plans for the government's finances bankrupt the state government and force them to seized your funds in that wonderful "tax free" account you boast about. Instead of having your decisions influenced by the need to provide a firm, sound and sustainable fiscal plan for Aryasht's government, as is your role as Counsellor on Economics, you seem to be influenced by wanting to protect your personal wealth to the exclusion of all else. Your horde of SCUE units isn't going to be very useful when you've nose-dived the Aryasht economy to the ground by implementing your current plan.

    If you're so concerned about economies failing on SCUE, then be responsible in your role as Counsellor on Economics and build a sustainable economy for Aryasht by providing for a solvent government. If Aryasht's government cannot maintain solvency itself, no matter how much money people have in tax haven accounts located inside its borders, it's economy will nose-dive just like those other 3 main Bastion Union micronations that you alluded to.


    And yet I will, by responding here and dissecting your words, no doubt give you a lot of free publicity, further popularizing your rag.


    My "rag" doesn't require your free publicity, though I'm more than happy to provide coverage on the inane nonsense that you spout as economic "expertise" from behind your "Doctorate of Economics". If anything, the well-respected readers of the "rag" that is the CS can learn what not to do when it comes to micronational economics by following your lead.


    I agree my spending level I proposed, juxtaposed against the current
    budget and per capita wealth of Aryasht, would clearly need an additional
    funding source. I did not think of the budget of Aryasht because, and
    I mean this with all due respect, I was thinking of the budget of Shireroth
    and other nations with much larger treasuries, along with a taxation
    regime fully implemented. This is because I envisioned that people would move their
    money out of other nations and into Aryasht, because Aryasht is a safer
    haven for their currency, and that Aryasht would then become an economic
    superpower to rival all others. Was that wishful thinking? Yes, I suppose so.
    I concede that it was not the place to put such wishful thinking in an official
    proposal to Prince Vrteti. But in spirit it was right, for Aryashti greatness
    is right. I will issue a statement amending my proposal so that the numbers
    can be corrected to more realistic amounts.


    Post subject: Re: Comment on Liam's article Reply with quote
    Thadeus,

    If you look closely at the article, it's classified under the Opinion section, as it is an editorial piece, hence the "flare" in its presentation, and it has succeeded in provoking further discussion of what I consider to be a short-sighted plan on your part. I would encourage you to share your thoughts in reply to the article on the website, as the CS readership extends well beyond the Bastion Union and others may wish to become involved in the debate. I would be more than happy to duplicate my following comments on the site to maintain continuity of the discussion there.

    In my opinion, your plan is far too likely to place Aryasht's finance in turmoil as you prohibit the state from accessing the primary source of revenue in micronationalism - personal tax/accounts. Most micronationalists that earn money in these economic simulations never spend it or move it or do anything useful with it, so when you say "no personal taxes", you block the Aryasht government from getting at the bulk of the funds accessible to it. That requires it to rely on business taxes to stay solvent, and this is not a realistic outcome in such a situation as (1) because most funds in the economy never move from personal accounts, businesses have limited access to capital, and (2) most businesses in a micronational economy are unable to generate any significant and regular capital from sales because most individuals decide not to participate in the economy. In essence, for the Aryasht government to even come close to solvency by relying on business tax, businesses would have to be overburdened with a significant tax rate on their income, which is less than motivational to the business owners or to those looking to become involved in the economy. Add to this that you want to give large, unviable, monthly allowances to the leaders of Aryasht, as well as a monstrously-underfunded credit-line to the remainder of the government via the Treasury allowance. Simply put, from what I see of your proposal, you would be the last person that I would ever want being a Minister of Finance (or similar position) within any micronation as your anti-tax stance would paralyze government finances, not to mention economic development period.

    I would have no problem supporting your desire for a tax haven, if your plan wasn't so blatantly bad for Aryasht, and so heavily-skewed against its very economic security.

    Quote:
    The protection of my personal bank account would be a side effect but it is out of the interest to protect everyone's private and personal bank accounts from a surprise 'gotcha' from the government of a nation or province is the main goal. Some semi-adult supervision is needed, in other words.


    So by removing the micronational government's (or to use the current example, Aryasht's) main source of revenue (taxation on personal income/accounts), you're aiming to prevent a 'gotcha' situation? Let me repeat that in slightly different words: by making it such that the government loses a significant primary source of income, you expect it to not have to undertake drastic actions, such as seizing the funds of inactive accounts, to maintain its solvency when it inevitably falls into chronic deficit?

    By paying a modest personal income tax or account tax, and by allowing long-term inactive accounts to be seized so that the funds can return to circulation, and possibly thereby provide actual economic benefit again, you would actually reduce the likelihood that the government would need to raise taxes or implement other revenue-raising measures. This approach comes closer to achieving your goal, and if those re-circulated funds from inactive accounts precipitated economic growth, you could potentially quite easily recoup your tax losses through investments and contracts. This is a small community and making an economic simulation work, let alone with some semblence of realism, requires that micronational governments generate significant per capita revenue. Your plan does not support this reality.

    Gotzborg takes a simple approach on the inactive account front that ensures that Thalers are kept in circulation in an attempt to maximize the potential of the economy for growth: if the entity is inactive for six months, the Royal Government seizes the funds in the entity's account, but on the understanding that if the entity ever does return to activity, it can apply to have all seized funds reimbursed. Those who return to activity have a safeguard, while the Royal Government still has access to a significant source of revenue to maintain a more sustainable cashflow that it can use to encourage economy development via being able to pay salaries, fund contracts, etc.

    Quote:
    Taxes (though small as they may be) and tariffs will replenish and restore the Treasury of Aryasht so that there will be a constant supply of funds for Aryasht to spend.


    As I said above, unless you're going to tax the few businesses in Aryasht dry, or the state government claws back the very little provincial tax revenue your plan permits on personal accounts ("very little" as most personal accounts would be at the tax-free 'national' level as per your tax haven plan), the state treasury cannot sustain 2,000 Erb a month being paid out to the leaders, let alone further government expenditures. There simply is not enough of a tax base in Aryasht today, nor would there ever be from business alone, to provide a constant and sustainable revenue.

    Quote:
    I never said business taxes would be high, just allowed. When I was thinking of business taxes, I was thinking about 1% of assets. That is very small. Please do not place words in my mouth.


    Thank you for the clarification. I can now confidentally say that Aryasht would most certainly be financially insolvent under your plan, as the state government would have access to only crumbs of Erbs to fund your 7,000 Erb a month series of allowances. 1% business tax on assets would yield only a laughable revenue to support such ambitious allowances.

    Quote:
    The decision to tax companies but not private individuals was not an easy one to make. But it had to be one or the other.


    It doesn't have to be one or the other. It can be both. In fact, it needs to be both to support your 7,000 Erb a month in allowances.

    You certainly have unique ideas on economic theory, but before you suggest a budgetary regime for Aryasht or any government, perhaps you should adjust your thinking from the theoretical to the practical and start at the key first step: identify your revenues, and then allocate your expenditures. If expenditures far outweight revenues, and you don't have the reserves to maintain solvency more than a month down the road, then either the revenues, the expenditures, or both need to be adjusted to make them realistic and sustainable.

    It's all well and good to want a tax haven in Aryasht. But that's not going to do you any financial good when your wider plans for the government's finances bankrupt the state government and force them to seized your funds in that wonderful "tax free" account you boast about. Instead of having your decisions influenced by the need to provide a firm, sound and sustainable fiscal plan for Aryasht's government, as is your role as Counsellor on Economics, you seem to be influenced by wanting to protect your personal wealth to the exclusion of all else. Your horde of SCUE units isn't going to be very useful when you've nose-dived the Aryasht economy to the ground by implementing your current plan.

    If you're so concerned about economies failing on SCUE, then be responsible in your role as Counsellor on Economics and build a sustainable economy for Aryasht by providing for a solvent government. If Aryasht's government cannot maintain solvency itself, no matter how much money people have in tax haven accounts located inside its borders, it's economy will nose-dive just like those other 3 main Bastion Union micronations that you alluded to.


    Quote:
    And yet I will, by responding here and dissecting your words, no doubt give you a lot of free publicity, further popularizing your rag.


    My "rag" doesn't require your free publicity, though I'm more than happy to provide coverage on the inane nonsense that you spout as economic "expertise" from behind your "Doctorate of Economics". If anything, the well-respected readers of the "rag" that is the CS can learn what not to do when it comes to micronational economics by following your lead.


    The State Academy of Elwynn was a wonderful educational institution
    in Economics. Therefore I am proud of my PhD in Economics from there.
    Now if only they would open back up the Economics department so
    that I can visit my old professors to catch up on things, like the latest
    cricket scores!

    Andreas wrote:I'm sure this was a typo and you meant to say '200'. Just for the sake of historical accuracy.


    I remember 2000 Erb, maybe even higher, 3000 Erb. But IIRC it was
    someone else actually handing them out, I think maybe one of the
    Duchies, not you personally.
    Thadeus Laing
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    Re: Comment on Liam's article

    Postby Andreas the Wise » Sat Feb 15, 2014 10:21 pm

    I had 200 erb as the basic bountying amount. People may well have accumulated up to 2000 for doing a combination of many awesome things (and me having spent six months since the last update), but by no means was it 2000 for a single bounty.
    The character Andreas the Wise is on indefinite leave. But he does deserve a cool war ribbon.
    Image
    However, this account still manages:
    Vincent Waldgrave - Lord General of Gralus
    Manuel - CEO of VBNC. For all you'll ever need.
    Q - Director of SAMIN
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