| Drew | Wednesday, July 25, 2012 - 07:09 pm 
Ok the invesetment fund.
1. The way it pays your country is that it pays out to citizens increasing how much money they pay in income taxes.
2. The way it pays out to your citizens is based on the interest earned on NON-invested leftover cash.
That cash is gained 3 ways
1. If your country has high salaries then the contribution by the population will be higher and this will go straight into the cash you get to invest.
2. If you sell your stock then the leftover money that pays out interest to your people will increase. But if you do this you aren't going to have any shares anymore. So buy shares cheaply and sell them when they are worth more. To increase that moreso.
3. Most corporations pay dividends, when companies do well they pay a portion back to the shareholders. So if you own 10% they made 1B and pay 50% of their profits you will get 50m that month that goes back into that free cash.
With all that said, there is no direct benefit from not having free cash available in the fund. If your portfolio is worth several trillion but all is tied up your citizens will not be compensated for their investments and will not pay higher taxes to your country. BUT without investing your country will not get this fund large enough to increase tax revenue by a significant amount anyways.
There is another topic of interest you may want to know. If too many investment funds liquidate and don't invest and leftover cash paying interest is too high then the interest rate will lower. I'm going to say it in a different way just in case that wasn't clear. If you get that investment fund nice and big and decide to empty it to increase your countries revenue, and many other countries do the same that profit per employee goes down as that leftover cash gets paid out at a lower interest rate.
One more thing, though contributions by the public may seem small depending on the country. Overpaying your people will have a positive effect. Whether its the proper move is up to your countries grand strategy. But when you think about it the high paid people pay higher taxes as it is, and the fact that they invest more in the portfolio means the money the money they invest in it goes back to them to be taxes indefinitely forever to continously pay and repay taxes to your country. This seemed to be a great tool for me, but as I have i dunno like 9T in my investment funds interest rates dropped and dropped again, oh yeah and again so it doesn't seem worth it anymore. But just food for thought knowledge is power right? ;) |
