I’ve mentioned before that I feel there should be more flexibility re tax bands. I’ve done a little modelling and have come up with an alternative option and thorough explanation.
Instead of “Flat Tax” and “Income Tax” policies, I’d replace them with “Income Tax” and an uncancellable “Income Tax Ratio” policies.
Within the new “Income Tax” policy, the formulae for the taxes of each income group would be as follows (with ‘x’ being the value for “Income Tax”, and ‘ITR’ being the “Income Tax Ratio” policy:
Not only is this not a huge change from the current formula, in terms of how final income is calculated, it allows all the range from 100%-0% flat tax, to a 100%:1% tax rate.
Using more reasonable values for ITR and “Income Tax” (0.3~0.8), I found this gave pretty reasonable tax bands. I did consider including a multiplier for ITR to allow for inverted taxes (i.e. poor have higher tax rates than wealthy), but I didn’t because hassle.
The effects of the current tax policies, would be combinations of the two policies. E.g. “Equality” would have an inverse relationship to ITR, but would still increase a little with higher “Income Tax”. “Capitalists” would be happy with a higher ITR and lower “Income Tax”. All other effects, like GDP and other groups’ happiness would fall somewhere between the bounds of current “Flat Tax” and “Income Tax” policies.
The big benefit (aside from the greater flexibility) would be that you can increase happiness of an income group without reducing total tax intake; increasing “Income Tax” and lowering ITR would please Middle Income as their taxes would drop, but this would be covered by a larger take from High Income. Alternatively, lowering “Income Tax” and raising ITR would please the Wealthy, but be partially covered by gains from the Low Income.
Looking purely at the .csv files for policies, simulations, and situations, I can’t see what problems this may cause. Maybe there’s something in the background code that makes this impractical, but it isn’t immediately obvious.