Why don't lower taxes or higher wages affect GDP?

[Larry the Cacodemon]

It doesn't make any sense. In real life lower taxes or higher wages means people have more money to spend on things other then basic life needs, and this mean more GDP.

But in this game lowering taxes doesn't seem to affect GDP at all, and I don't think higher wages do it either. I really hope I am wrong, because if I am not then the economy of this game is laughably broken.

[Farsight]

There isn't a way to control wages in this game, so it's reasonable to assume that when the tax rate goes down, so will your wages.

Source: The Income Tax here in Great Britain dropped by a full 5% this year, sadly so did my wages...

[Larry the Cacodemon]

Why would lover income taxes lower wages?

[Farsight]

Αναρτήθηκε αρχικά από hakkarin:

Why would lover income taxes lower wages?

The same reason that I got a large pay rise when the Income Tax increased by 10%.

[Larry the Cacodemon]

Αναρτήθηκε αρχικά από Farsight:

Αναρτήθηκε αρχικά από hakkarin:

Why would lover income taxes lower wages?

The same reason that I got a large pay rise when the Income Tax increased by 10%.

Which is what?

[PFC Chamberlain]

Hakkarin, Less taxes means companies have to compensate employees less. Higher taxes means they have to pay employees more to make up for it. Now I don't live in the UK so I don't know if they have laws or anything to enforce that.

[Larry the Cacodemon]

Why do companies have to compensate employees less when taxes on income are lower? Wages are controlled by the supply and demand of labor. If the supply is greater then the demand then the employer can get away with lowering wages and visa versa. Simply lowering income taxes doesn't just magically give employers the ability to pay lower wages.

And how on earth does raising taxes on people make companies pay higher wages?

[SMRT]

Αναρτήθηκε αρχικά από hakkarin:

Why do companies have to compensate employees less when taxes on income are lower? Wages are controlled by the supply and demand of labor. If the supply is greater then the demand then the employer can get away with lowering wages and visa versa. Simply lowering income taxes doesn't just magically give employers the ability to pay lower wages.

And how on earth does raising taxes on people make companies pay higher wages?

And this higlights how the complexity of Democracy 3 is but a mere speck of dust compared to the complete cluster-f***k of the real world :D

[Prydzen ᛋᛟ]

Lower taxes does not mean wage decrease, There is no real reason for doing that unless you are on the minimum wage, and if you are on your minimum wage it is illegal to lower it.

[NimrodX]

Taxes do affect GDP. Put the cursr on the GDP icon. Capital Gains, Corporation Tax, Airline Tax, and Gas Tax all have a negative effect on the GDP.

I too think there are some connections between other taxes, like income tax, and the GDP that are missing from the game, but this probably has to do with game design goals and playability. I believe that the developer has stated that he didn't want the game to be "too stacked against" any particular political philosophy so people could conceivably "win" using totally opposite strategies, but this is obviously more of a game decision to make things more entertaining for more people than it is an attempt at realism.

Kind of like how you can't make all the simulated voters in the game happy, the developer can't make all the non-simulated real players happy either.