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Author Topic: [-] Taxes  (Read 341 times)

Offline LemonButt

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[-] Taxes
« on: November 08, 2013, 08:29:52 PM »
Obviously there are a lot of improvements that could be made to the accounting system, but this one is easy.

When it is time for the taxman to take your money, I'd like the game engine to look at the entire year versus just the more recent month/quarter to determine how much is owed.  The reason for this being that the taxman will often get to the profits before a player can.  For example, in DOTM we are 9 months in to the year 1986.  My airline has $1.9 billion in revenue and my expenses are higher than my revenues by about $25 million as I type this.  Despite being in the red $25 million for the year, I just paid $4 million to the taxman and have paid nearly $20 million in taxes despite having a net loss on the books.  Last year I got a $40 million tax return, but only because I took out loans to spend the money that was taken from me.

Right now, the only way to have zero tax liability is to borrow money (or HQ in Dubai lol).  If you have $3 million in profit and the tax man takes $1 million, leaving you with $2 million, then the only possible way to get that $1 million back is to spend that $1 million you no longer have, which often means taking a loan.

I know what everyone is thinking--boo hoo he paid $40 million in tax and had to take a loan to spend the money to get a $40 million tax return.  I guess I am technically a "large airline" in DOTM, but really this affects small airlines far more than big ones.  If you are a small airline, you will likely only have a few hundred thousand/week in profit.  It can take months to save up enough money just to schedule one aircraft and buy slots.  If you go a full quarter with $200k in profit, that is $2.6 million in cash.  However, before you can spend that $2.6 million you'll be hit by the taxman and be left with just ~$1.8 million.  The only way to get that $800k in taxes back is to spend that $800k you no longer have, despite the fact you are likely in the red for the year (especially year one).  On top of this, if you have 4 aircraft that is one C-check every quarter (an airline likely has more than 4 aircraft).  This means another hit of several hundred thousand dollars plus taking the plane out of the air for at least a week, hurting your profits.  Thus, it because a vicious cycle where it feels like the cards are stacked against you when you're trying to get a small airline off the ground.

So in a nutshell, before the taxman calculates his take, I'd like him to look at the entire year's revenue/expenses first.  If the airline is in the red for the year, take nothing.  If they are green, adjust the amount taken by the taxman to be in line with the actual tax liability for the entire year versus just the most recent period.  The only time a player would get a tax return then is if taxes were taken early in the year, the airline then goes into the red for the year and finished the year red, then they would get the refund of taxes taken early in the year.  Instead of these ridiculous monster returns of $40+ million, they'll be more in line with the real world.
« Last Edit: December 10, 2013, 06:24:06 PM by sami »

brique

  • Former member
Re: Taxes
« Reply #1 on: November 08, 2013, 08:50:32 PM »
Definitely second this proposal : tax impacts badly on small operations, as LemonButt demonstrates above, you not only have to earn and save for a new aircraft/slots/etc, you have to earn the tax on top of that as well, then wait for year end to get it back : yes, you can borrow, but that's IF you can borrow the required amount, esp in the early years for small operations, there is little to no loan facility until you own some hulls or have repaid the start-up loan : and that's the catch-22 again, having to earn the profits to do that and earn the tax on them as well, again : all very well saying time your purchases to max the year-end tax liability window of opportunity and get it back in mid-jan : if you have saved enough, or built up sufficient credit rating, and if you havent, the taxman plunders your meagre reserves and the whole cycle repeats next year until you finally break out of it somewhere in year 5...

I'd go a bit further than the changes proposed by LemonButt : I'd ask for year-to-year reference as well : so previous 'red' years get some credit applied to later 'green' years

BD

  • Former member
Re: Taxes
« Reply #2 on: November 08, 2013, 10:01:59 PM »
So in a nutshell, before the taxman calculates his take, I'd like him to look at the entire year's revenue/expenses first.  If the airline is in the red for the year, take nothing.  If they are green, adjust the amount taken by the taxman to be in line with the actual tax liability for the entire year versus just the most recent period.
Would like to hear more details on how this would work...

Are you proposing a "rolling" 12 month assessment each week?  That is, on a given week, 1/52(one 52nd) of the taxes due accumulated on the prior 52 weeks is deducted from the current week?  This would probably also mean taxes are deferred for the first year. 

Would refunds apply to a 52 week loss, or would that just result in zero tax liability for that week?


Offline LemonButt

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Re: Taxes
« Reply #3 on: November 09, 2013, 06:12:35 AM »
Would like to hear more details on how this would work...

Are you proposing a "rolling" 12 month assessment each week?  That is, on a given week, 1/52(one 52nd) of the taxes due accumulated on the prior 52 weeks is deducted from the current week?  This would probably also mean taxes are deferred for the first year. 

Would refunds apply to a 52 week loss, or would that just result in zero tax liability for that week?

Not a rolling 52 weeks...it would still be calendar year.  If you turn a $3 million profit in the first quarter, tax man takes $1 million.  If second quarter is a $10 million loss, no tax and you are at -$7 million for the year.  Third quarter you turn a $3 million profit, but instead of paying $1 million in tax you wouldn't pay anything because you are now -$7 million + $3 million = -$4 million in the red still for the year. 

If fourth quarter you break even, then you are -$4 million for the year and would get a $1 million tax return.  If you earn $5 million in profit that puts you at +$1 million for the year and you would pay zero additional tax because you have already paid $1 million in taxes with annual profit of only $1 million and would get a refund of ~$600k (total tax of ~$300k).  If you earn $10 million in profit, that puts you at +$6 million for the year and you would pay $1 million in tax for a total of $2 million in tax paid for the entire year and get no tax return.

Offline Sami

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    • AirwaySim - Are you the next Richard Branson?
Re: Taxes
« Reply #4 on: December 10, 2013, 06:23:54 PM »
Taxes will be checked with the accounts system change, no special tweaks will be made to it with the current system.

 

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