Your nation's Tax Rate is the percentage of your citizen's individual income that you take each day as taxes. For example, a tax rate of 25% when your citizens earn $100 would give you $25 a day per citizen. This number is multiplied by your total number of citizens (not including soldiers) to give the amount you earn daily in taxes.
Collecting Taxes and Interest
Taxes can be collected once per day, and if they are not collected they are accrued and can be claimed the next day instead. If you choose not to collect taxes, you will earn interest (at a rate of 12%) on your AVAILABLE cash, not your uncollected taxes. There is a maximum interest of $10,000. The tax rate may be changed in the "Edit my Nation" page.
Effects of Tax Rate
Lowering your tax rate lowers the percentage of taxes each of your citizens pay on their income but increases your population happiness. The happier your population is the more money they will make, so sometimes lower tax rates will earn you more money than would a higher tax rate.
- 10% - 16% = +0 population happiness
- 17% - 20% = -1 population happiness
- 21% - 23% = -3 population happiness
- 24% - 25% = -5 population happiness
- 26% - 28% = -7 population happiness
Despite how 'angry' your citizens may get about the amount they are paying, there are no other negative effects to a higher taxation rate.
FAQ
What is the best tax rate?
- It depends. If you look at the table above, each 'group' gives the same population happiness penalty, so whichever you use should be at the end of these groups (16%, 20%, 23%, 25% or 28%) to maximise income. Try them all and see which gives you the most income, as this is the most important aspect of tax rates. Most older nations keep their tax rates fixed at 28%, but early on in the game a lower tax rate may be advantageous. Try it out.
Here is a quick way to find out your ideal tax rate: Set your tax rate to 10% and see what your "Avg. Gross Income Per Individual Per Day" is. Let this value be X.
X is between Ideal Tax Rate
0 and 10,00 16%
10,01 and 32,66 20%
32,67 and 50,80 23%
50,81 and beyond 28%
Note that 25% is never a good choice. This check must be done after each change to happiness (excluding the tax rate change) to be accurate.
It says my citizens are angry with my current tax rate. Should I change it?
- No, not if it is making you enough money. The only effect of your citizens being angry is a decrease in happiness, and since happiness only affects income as long as you're getting the most money you can, it's fine to keep the tax rate the same. No matter how angry your citizens get, they will not riot and there will be no negative effects.
Is it cheating to change my tax rate to 28% just before collecting taxes and then change it back to 10% just after collecting taxes?
- It's true, a lower tax rate will improve population happiness. However, the only factor that is affected by population happiness is your population's taxable income. The only time that your population's taxable income comes into play is when you collect taxes. Therefore, lowering your tax rate when you are not collecting taxes has absolutely no effect on the game beyond appearance. In other words, if you raise your tax rate when you collect taxes, your population happiness will automatically be lowered and the game will think that your tax rate was at the highest rate for the entire day. So no, it's not cheating.