The Case for Low Tax RatesBy Bradford Fisher
For many players of Middle-earth, the potential tax revenues of their starting population centers is a target too tempting to be ignored. "Do it," whispers part of you--"raise the tax rate to 70%. You want to be a military power, don't you?" Dreams of enormous armies, tax-funded agent companies, and cash grants to the "Save the Éothraim" Foundation run through your head. And why not? After all, you need that extra army . . . don't you? I have yet to have a single experienced ME player suggest lowering, rather than raising, taxes. Is the idea of lowering taxes to 39% that crazy?
Advantages of high taxesHigh taxes can result in large surpluses and may provide a nation with a great deal of monetary flexibility in character creation, buying supplies from the market, and creating characters. For some nations, high taxes make a great deal of sense; particularly nations such as the Witch-king and Dragon Lord. These nations need large militaries to fight the Free and cannot spend the time worrying about going bankrupt at the same time. Nor are they likely to keep many of their population centers for very long, in any case. Among many of the Free (and some Neutrals), a case can also be made for higher taxes. A 10% increase in taxes yield huge increases in revenue due to their broader tax base, which can then be plowed into military forces needed to crush the Dark Servants or bottle them up inside Mordor.
Disadvantages of high taxesThere are several problems with high taxes. First, higher revenues tend to result in increased expenses. This may get to the point of negating the entire reason for raising taxes in the first place. This is a psychological point, but it is still valid. Who hasn't been tempted to leave huge garrison forces at home "just in case"? I am currently playing against a Southern Gondor player who has kept an elite force of 3000+ Heavy Cavalry at home for over twenty turns now. With his large revenue base, there is little reason to use adapt a "use it or lose it" philosophy, so it sits at home and molders with little gain for the Free. Conversely, the conflicting desires to maintain a large army to protect myself from the Gondors and the necessity of avoiding huge deficits drove my nation into an activist, aggressive, and ultimately useful, military posture.Decreased loyalties are a very real problem for kingdoms with high tax rates. Aside from the loss of recon maps from loyal major towns and cities, its population centers become vulnerable to mass emissary assaults, fail to detect foreign characters, and become difficult to upgrade. But the main problem with the resulting low loyalties fall on the nation's ability to create and maintain new camps early in the game. Even a few turns of dropping loyalty will rapidly vaporize its new camps unless one stations emissaries there to maintain them (preventing them from creating new camps, which in turn reinforces the need to maintain high tax rates). An often overlooked problem with high tax rates for the Free and a Free Haradwaith is the indirect impact of high taxes upon the market. High tax rates by kingdoms with broad tax bases tend to result in huge gold reserves, which in turn hold up market prices. These high market prices then finance the armies the Dark Servants are fielding against the Free.
Advantages of low tax ratesLoyalties slowly increase at all of a kingdom's population centers with lower tax rates. Creating and maintaining camps is far easier with a low tax rate--I have created and maintained camps with loyalties of 6 and 7 without characters present. In addition to providing products to sell on the market, these camps may be upgraded later (as the loyalties slowly drift upward) to provide a broader tax base. Higher population center loyalties also provide room to absorb blows to loyalty from enemy emissaries, enemies capturing population centers, and increasing tax rates. Higher loyalties also help population centers resist threats.Low tax rates provide a nation with a built-in "buffer" between its reserve and bankruptcy if fiscal problems occur due to poor planning or unforeseen disasters. They also force one to economize and trim expenses wherever they are not essential.
Disadvantages of low tax ratesLow taxes require constant attention to keeping deficits and costs down. Low tax rates also tend to be self-perpetuating. Once embarking upon a low-tax strategy, numerous unfortified camps will force keeping rates low. This can be a problem if the deficit becomes a problem due to low market prices or unforeseen disasters. Raising taxes risks vaporizing the very camps that are preventing the deficit problems from being any worse than they already are!
ConclusionMaintaining low tax rates in Middle-earth is not an impossible task, nor is it without benefits for the nation which chooses to pursue it. While I cannot recommend it for every nation in Middle-earth, the potential rewards are worth considering, particularly from nations which would not gain much revenue from high taxes in any case. Likewise, a nation adopting a high-tax policy should be careful to avoid or minimize the potential pitfalls that accompany them.
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