Economic Policy Manifest Of The Republic Of Kochatka

The following is the economic policy manifest of the president of the new 'Republic of Kochatka'. It is written for the benefit of all CEOs who currently operate corporations within the republic or who may operate corporations within the republic in the future, outlining the president's economic policy for the foreseeable future.

Immediately following the president's registration of the republic, the corporate profit tax was raised to the maximum permitted level as a temporary measure to help raise funds to rapidly develop the republic's education, transportation and health infrastructure. This phase of the republic's planned development is now nearly complete, with only the building of back-to-work schools and special clinics remaining.

The president currently intends to maintain transportation, health and social security indexes at or slightly above one-hundred in order to maintain a welfare index sufficient to keep workers reasonably productive without too severely depleting the republic's treasury. The president also intends to maintain an education index at or slightly above two-hundred in order to maintain a high degree of flexibility in the labor force in order to accommodate natural fluctuations in the labor market, thus maintaining a high rate of labor force participation which will thus in turn maximize the number of corporations which may be sustained and also minimize the burden on the republic's social security system.

The republic currently possesses plenty of funds to complete the building of the planned back-to-work schools and special clinics, and the beginners income booster ensures that the republic will possess sufficient funds to maintain its current infrastructure for the near future even in the absence of a corporate profit tax. Consequently the corporate profit tax is currently being lowered to zero, although it may need to be raised somewhat again in the future if other sources of income such as country resource payments, taxes paid by citizens, and profits of state-run corporations, prove insufficient to maintain the intended education, transportation, health and social security indexes.

Immediately following the president's registration of the republic, CEOs were banned from building new corporations within the republic or purchasing corporations already operating in the republic, as a temporary safety measure due to the inability, for the first sixty game-months after the republic's registration, of the president of the republic to nationalize parasitic, unprofitable private corporations abandoned or neglected by their owners, in order to close them and make room for more healthy corporations, whether private, public or state-owned. Because this limitation on the republic's president will soon expire, the prohibition of CEOs building or buying corporations within the republic has now been lifted and all CEOs are now encouraged to build corporations within the republic.

The president intends to maintain the corporate profit tax at the minimum level necessary to maintain the previously specified education, transportation, health and social security index. However, because state-run corporations are generally less profitable to a nation in Simcountry than are CEO-run corporations, a lower percentage of CEO-run corporations will necessitate a higher corporate profit tax in order to maintain the desired education, transportation, health and social security indexes, and vice versa. Therefore all CEOs are encouraged to build or relocate as many private and public corporations in The Republic of Kochatka as the republic is able to sustain. The more CEO-run corporations there are, the less each of them will need to be taxed.

There is currently no need to worry if there are not sufficient workers in the republic to staff your new corporation. Several state-run corporations have been recently established in the republic as a precaution in case the number of CEO-run corporations currently established in the republic and also to be established in the future does not provide a sufficient level of employment to the citizens of the republic. However, because CEO-run corporations tend to be more profitable for a nation in Simcountry than do state-run corporations, the state-run corporations will be closed down as needed in order to provide sufficient workers to staff CEO-run corporations.

CEOs operating within the republic will also be regularly notified of any changes to the republic’s economic policy, and will be freely permitted to express their opinions regarding any such changes. In particular, CEOs operating within the republic may from time to time be requested to express their wishes regarding planned changes to the republic’s education, transportation, health and social security levels, and also to the corporate profit tax rate, the expressed wishes of the CEOs to be taken into account by the president when planning any changes to the education, transportation, health or social security levels, or to the corporate tax rate. It must of course be remembered that higher education, transportation, health or social security levels may necessitate a higher tax rate, and vice versa.

Also, be advised that if ever the republic of Kochatka suffers from a shortage of labor which can not be corrected by adjusting education priorities or by closing state-run corporations, any CEO-run corporations which have been found, over an extended period of time, to contribute less on average to the economy of the republic than the majority of CEO-run corporations within the republic, may be singled out for removal by the president of the republic.

Once a CEO-run corporation is singled out for removal by the president, the president will deliver a two-week ultimatum to the CEO, demanding that the CEO either close or else relocate the corporation, after which time, if the corporation has not been closed or relocated, the president may nationalize the corporation in order to close it in order to free up workers for more profitable corporations to be built by other CEOs.

Update: Targets for the transportation and health indexes have been increased to 120 as per the request of a CEO. Consequently as the beginner's income booster wears off, the corporate profit tax may need to be raised to a higher level than would otherwise be necessary, to compensate.

welcome to sim country, and thanks for the info, a bit much to read tho

Welcome indeed!

I apreciate your honesty but i would never invest in a country which doesn't garantee a 0% tax rate. But that's just me.

@ blah Blah:

The corporate profit tax rate isn't nearly as important as the country's education, transportation, health and social security indexes. With low indexes, workers are less motivated. Then it becomes harder for corporations to earn money and easier for them to lose money. A 0% corporate profit tax doesn't benefit you at all if your corporation is losing 100.00M SC$ monthly. In contrast, if your corporation is earning 400.00M SC$ monthly, then even if the corporate profit tax was 99%, you'd still be earning 4.00M in net income from that corporation. That isn't much, but it's still better than the corporation losing money. High taxes can certainly hurt CEOs, but low indexes can hurt them much more. Therefore sometimes its better to accept a high tax rate even though you don't like it, because without it a country might not be able to sustain the high indexes needed to keep your workers productive.

Something to think about.


At best you can generate 20% extra production with all those extra investments your goverment makes.

Do you think that compensate for: 47% tax rates?

Depends on the corporation, but the answer in some cases is yes. Especially at higher salaries. How many cases and what percentage? I'm not sure.

Pherhaps in some corner cases it will. But generally speaking for most corporations it won't.

@ blah Blah:

There's a law of diminishing returns involved. You have to keep your country's indexes at a certain minimum level or corporations in your country can't earn anything at all. At the same time, each successive point you raise your indexes by costs the same to maintain, but provides less of a return. At some point there has to be an ideal compromise between low taxes and high indexes. Originally my plan was to keep my education index at 200, and my transportation, health and social security indexes at around 100 so as not to require too high a tax rate, because in the past I have found that to be a good balance. However, I was requested by one of my CEOs to raise my transportation and health indexes to 120, which I am now working to do. However, if other CEOs complain about the higher tax rate which this will necessitate, I may lower those indexes back down to 100 in order to keep my tax rate down.

I understand how the game works. Feel free to look up my country ;)

I would have loved it if your policiy would work. But it seems that it's not working. Your economy is just to small to sustain your numbers. To bad, i would have loved a new strategy for my new countries.

With a 47%ish tax rate I would expect a lot better index numbers then 120 but I've seen enough. Good luck with your country and make sure to have fun! That's why we play this game!

@ blah Blah:

Lol. You realize I'm just getting started on this country right? It's far too early to see whether or not my policies will work. Right now my country has far too few corporations to employ all my workers. Consequently, there are fewer corporations contributing country resource payments to my country's treasury, reducing its income, and for the same reason there are also more unemployed workers receiving social security payments from my country's government. As more CEOs establish more corporations in my country, both of those problems should be alleviated. Also, some of the corporations in my country aren't being managed properly by their owners, and are consequently taking significant losses. Because of this, they also aren't contributing much to my country's treasury. As I gradually weed out such corporations and various CEOs build better corporations in their place, that problem should also be alleviated. Then if, after my beginner's income booster wears off, I'll attempt to raise my corporate profit tax to provide the funding to maintain my country's indexes, and if the maximum corporate profit tax which is allowed by the game or which my CEO investors are willing to tolerate is insufficient to maintain my country's indexes, I'll be forced to lower them. First I'll probably start by lowering my transportation and health indexes to 100, and if that is insufficient perhaps I will lower my education index to 150. We'll just see how it goes.

Private corps are overrated.... Try 120 indexes with 85% social security

i agree with jackwagen, although i'd got 93ish for SS, take a look at how much a state corp makes, compair that to the country pay out of CEO corps... State corps make all their money for the country, private, don't make nearly so much, even tho they are more "profitable,"

@ Orbiter:

I already checked that. According to my recent observations, well run private corporations pay more on average in country resource payments than the average total profits of well-run state-run corporations. That doesn't include the corporate profit tax which can also be levied.

Just to add~ Private corps allows you to have clinics/back to work schools which increases your overall avail. workforce for more companies, in turn more income~ But since there is a cap, its best to have a mix of both state/private companies.

Well when i say state corps I mean public corps.... Public corps can upgrade higher then private corps and you can manipulate the values with the Tax rate to make money

You can also decide what exactly you want to build without relying on the whims of a CEO..... Sure there is a small small risk of hostile takeover that can be managed by working with others to buy your shares but it is no greater risk then the risk of a CEO going bonkers and setting production to zero

@ Jackwagen:

I know about the risk of CEOs going bonkers. That's why I have a policy of seizing and closing unprofitable CEO-run corporations if the CEO fails to remove them within a reasonable time after I request that they remove them.

Policy Update - Introduction of Air Transport Corporations:

In general, CEO-run corporations are more profitable then state-run corporations. However, air transport corporations can only be built by presidents and not by CEOs. However, many presidents prefer a fully CEO-run economy, and so are reluctant to build any state-run corporations, including air transport corporations. This often artificially bids up the price of air transport services, rendering such corporations unusually profitable. Consequently, The Republic of Kochatka is now introducing state-run air transport corporations, which will compete freely alongside CEO run corporations. These corporations will be subject to the same fundamental rule as CEO run corporations: Namely that whenever there is more demand, from corporations, for the republic's workers and resources than the republic can meet, those corporations, private or public, CEO-run or state-run, whose total contributions to the republic's economy are the smallest in proportion to the republic's resources which they consume, will be required to either relocate or else close down. It is the intention of the president of the republic to, if these air transport corporations prove a success, IPO them to various CEOs so that they may benefit both from the advantages of being CEO-run as well as from the unique advantage of the tendency of players not to build them in sufficient numbers. Simcountry gives all corporations a built-in boost for being CEO-run, and also gives public corporations a built-in boost if the player who controls them owns fewer than 25% of their shares. Consequently, if these air transport corporations are successful, the republic's president will probably eventually seek to sell 24% of the shares of each of them to one CEO or another: Just enough to give that CEO a controlling share of the corporation while staying below the 25% limit to the number of shares held by the controlling share holder. Of course, different air transport corporations will be IPOed to different CEOs, but with each CEO receiving the full 24% of the shares of at least one air transport corporation. The republic's government will probably retain a further 23% of the shares of each corporation, in order to supplement the governments income. The remaining 53% will probably be sold to the investment portfolio of the republic's citizens, or else sold to other miscellaneous investors. Until they are ready to be IPOed, these air transport corporations will be nationalized to prevent CEOs from bidding on them. This is to ensure that no one CEO acquires the entire corporation and keeps it all for himself or herself. Given that air transport corporations are likely to be more profitable than other corporations, and given that CEO-run corporations tend to be more profitable than state-run corporations, a private, CEO-run air transport corporation would probably be yet more profitable. However, given the built-in advantage given to public corporations where the controlling share is less than 25%, a public, CEO-run air transport corporation where the controlling CEO owns only 24% of the shares ought to be even more profitable still. Initially a minimum of three state-run air transport corporations will be maintained by the republic. This is so that, by keeping the salaries in each of them at slightly different levels and measuring their profitability over time, the president can hone in on the ideal salary levels in these corporations. That is to say that if the air transport corporation with the highest salaries is the most profitable, the salaries in all three will be raised, if the air transport corporation with the lowest salaries is the most profitable, the salaries in all three will be lowered, and if the air transport corporation with salaries in between is the most profitable, the salaries in all three will be kept the same. If any one is unhappy at the thought of owning only 24% of a public corporation rather than 100% of a private corporation, consider these two things: First, the president does not intend to force the proliferation of air transport corporations in the republic at the expense of other corporations. Instead, these air transport corporations will compete freely with all other corporations according to the simple rule that those corporations which contribute the most to the republic are permitted to stay and that those which contribute the least to the republic are required to leave. Second, if these corporations do indeed prove to be more successful than others, it may be much better to own 24% of one of one of them than to own 100% of another corporation. After all, would you rather own 24% of a tireless economic juggernaut which continually produces a high profit, or 100% of a sickly, anemic corporation which barely produces a profit at all, and which frequently produces losses. Personally I would much rather receive 24% of a profit than pay 100% of a loss.

I'm just planting a bunch of corn and hoping for the best.

@ Karrde:

Lol