3.5% tax rate with 64% tax?

[corwin90]

I had been keeping my tax rate as low as possible to encourage growth on my home world. But when I started running out of money, I started tweaking taxes to make up the difference. I was rather surprised how little difference insanely high tax made to the population growth.

50% tax - 3.6% growth
60% tax - 3.5% growth
64% tax - 3.4% growth

64% was the highest tax I could go at my home world without going into 'Unhappy'.

This really surprised me. Wow! If I had know this earlier, I would left my tax WAY higher. I would much rather have the 10-20K per year than a whopping 0.4% to 0.6% population growth.

Does anyone have a chart they've created that maps out the different tax rates versus growth for the current version 1.95.5ish?

Thanks!

[szabferi]

Isn't the world heavily populated already?

No numerical evidence at my hand right now, but my impresson is that in case of smaller colonies the percentage difference is much higher, but as the colony grows, the growth percentage is decreasing. Because of this, the strategy "keep tax low for rapid colon growth" is still valid....

[radwyn]

Remember also though high taxes can make your private sector run at a loss

[Retreat1970]

I would much rather have the 10-20K per year

I would rather be patient, keep the tax rates low to promote growth, then reap the economic whirlwind while you're still growing at 3%.
Just my style not trying to be rude [:)].

[DeadlyShoe]

the tax rate:growth relationship was changed a few patches ago to make tax minmaxing less effective

[corwin90]

Pre-Warp, I started with 4,000M and think my taxes were around 18% and gave growth of 8-9%. I emerged from Pre-Warp with 8,000M and was happy I'd stayed close to zero cash. Once I started building lots of ships and bases, I set my taxes to around 28% and saw my growth drop to 4%. Then, I felt the need to double my military to counter the pirate threat. I went seriously into the red and maxed out my taxes. I expected it would drop my growth to zero. Nope. It only dropped my growth from 4% to 3.5%.

Consider some numbers that I just made up: Home world population is 11,000M with a cap of 17,000M. Let's assume income is 200K. Consider two scenarios:

1. Taxes 28% gives 56K income and 4% growth rate. It takes 11 years to reach just below 17,000M.
2. Taxes 64% gives 128K income and 3.5% growth rate. It takes 13 years to reach just above 17,000M

At Max population, let's assume income of 300K. At 64% taxes, that is 192K income. Which method gives the most money? 28% taxes and 4% growth or 64% taxes and 3.5% growth?

At the end of 13 years, I have

1. 11 years at 28% of 200K is 11 x 0.28 x 200 = 11 x 56 = 616. Add to this 192 for two years. 616 + 192 + 192 = 1000

2. 13 years at 64% of 200K is 13 x 0.64 x 200 = 13 x 128 = 1664.

(Clearly, these numbers don't show the whole picture because the colony income would slowly grow from 200K to 300K over those 13 years. But I think the comparison still works.)

Just to rehash:

18% taxes gave 9% growth
28% taxes gave 4% growth
64% taxes gave 3.5% growth

[johanwanderer]

That's all fine if you only have one colony, which is mostly true at the beginning of a prewarp game. However, if you have more than one, your population might migrate to the ones with lower taxes. Also high taxes breed tax evaders (the X% compliance number) so you might also lose out in that regard.
 
Given all that, I only tax as much as I need. At the beginning, I don't need a lot of money (since I can't really build anything) so I keep the tax low. Low cash flow also means lower "protection" fees, so that's a bonus. When I have enough tech to start building, then I raise taxes accordingly (always try to keep the people happy though, I'm nice like that