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The Taxman Cometh

Posted By Kurt "Telas" Schneider On April 15, 2009 @ 6:26 am In GMing Advice,Tools for GMs | 15 Comments

Does your campaign use taxes? Today’s a great reminder that taxes have been with us ever since one person could coerce/convince/threaten others to pay them. In the US, generally considered a low-tax nation, the upper tax bracket is 35%, and if your ‘adventuring party’ is considered a corporation (by way of their Adventuring Charter), they’re also subject to a 35% corporate tax rate, for a total tax bill of 42.25% of gross adjusted income. (Of course, you can probably write off that magic armor, although I would guess it would have to be depreciated over a few years.)

OK, this is only partly serious, but if you look at the traditional fantasy campaign from the point of view of someone running a country, you’ve got extremely high-wealth individuals, claiming to work within the boundaries of the law, running around and producing so much wealth that they are causing inflationary effects wherever they settle. Not to mention the accidental breaking of ancient seals, releasing of hordes of demons/orcs/undead, burned down taverns, etc. that the government has to deal with. These guys are almost demanding to be taxed.

I missed the perfect opportunity in my last campaign to tie taxes to an Adventuring Charter (which allows the PCs to keep the sword they found in the ancient crypt, regardless of whose grandfather it belonged to). I don’t think I’ll make that mistake again.

So, leaving out all politics, especially the bumper sticker catchphrases, do you tax your player characters?

About  Kurt "Telas" Schneider

Kurt Schneider played D&D in 1979 at summer camp, and was hooked. He lives with his wife, daughters, and dog in Austin TX, where he writes stuff, and tries to stay get fit. Look for his rants under the nom de web Telas or TelasTX. Quote: “A game is only as balanced – or as good – as the GM."




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15 Comments To "The Taxman Cometh"

#1 Comment By John Arcadian On April 15, 2009 @ 7:32 am

Nice article! Taxes are something you don’t often think about in a game. The only encounter I ever had with them was playing a less than intelligent fighter. My GM forced me to play him stupid, but I really wanted him to be nature wise not civilization wise.

The priest in our party convinced him that he had to pay a “Monster Tax” to the church, and just luckily enough he was an authorized monster tax collector. So a fee for every monster killed was required. I wasn’t even allowed to use the 1040 MeZ form to file. Kobolds and Kobold colonies were taxed differently and it required a certified accountant to get into dragon taxation. This became the main reason my character feared fighting a dragon.

That priest should have gone with thief for his class . . . .

#2 Comment By Rafe On April 15, 2009 @ 9:11 am

This kind of thing is where Burning Wheel really shines. When a game is started, the group chooses a resources cycle, which tends to be monthly, seasonal or annual. After such a period of time, the characters must make a sort of lifestyle maintenance Resources roll. This is fairly generic in that Resources can be cash on hand, availability of credit or other forms of transferable wealth, property, etc. So the maintenance test can be rent due, taxes owed… the list goes on.

It becomes a little more difficult with D&D or another game where the characters are complete transients. They have a home city, but when are they not galavanting across various nations or continents? To whom do they owe taxes? Do they have to return home to do so? Do they pay taxes to whichever nation they happen to be in at the time of collection?

#3 Comment By Scott Martin On April 15, 2009 @ 9:25 am

@John Arcadian – Are you sure he didn’t? Perhaps his god was the patron of swindlers…

Taxes are interesting to contemplate, particularly given the power of characters in most settings. Much as I wouldn’t want to repo a wookie’s car, I’d hate to be the tax collector trying to convince a high level wizard to part with his goods.

Medieval taxes were interestingly structured. One good tax for transients was murrage– a gate tax, paid whenever you entered a city. Bribes go right along this path too.

#4 Comment By Kurt “Telas” Schneider On April 15, 2009 @ 9:54 am

Since writing this in the pre-coffee wee hours, I’ve had a few thoughts about it.

Countries that have experience with adventurers may require an Adventurer’s Charter, or a temporary license for non-residents. The tax rates for non-residents could be outrageous (see: out of state college tuition), which leads to bribery, forgery, bounty hunters, etc.

Other countries may demand that all items gained from adventuring be sold at state-run pawn shops. The prices are what you expect, and a well-connected guild has exclusive rights to re-sell the items at full price.

Don’t forget bureaucracy. All adventurers may need background checks, classes on safety and local laws, local and national certifications, and be required to register themselves with the local law enforcement agency. And whatever you do, don’t offend the person in charge of your certification/license/etc!

This isn’t held to the fantasy genre, either. Imagine the quarantine restrictions at a space station, or the size and complexity of a Pan-Galactic Tax Code.

Then again, don’t we play RPGs to avoid all this? ;)

#5 Comment By Walt Ciechanowski On April 15, 2009 @ 10:57 am

I once had a lot of fun with this in a fantasy campaign. I decided to “get medieval” and shocked the PCs when they had to pay a gate tax to get into the city. They promptly went to the nearest inn and discovered that the price was inflated due to a number of taxes that the innkeeper rattled off.

Shaking their heads, the PCs dug out some gold pieces and gave them to the innkeeper. The innkeeper examined one and said he could not take it because it wasn’t minted with the city seal. The PCs had to leave the inn and visit the moneychanger, who was only too happy to convert their currency for a “modest” percentage. Of course, there was a moneychanging tax, too…

#6 Comment By Sarlax On April 15, 2009 @ 11:34 am

I think the government in any game with high-powered heroes is going to have to get clever to impose taxes on the personally-powerful. I think D&D pulls this off via the reselling economy.

In D&D, you can only sell a “recovered long-term durable good” for a fraction of the original price. (50% in 3E, 20% in 4E). Why? Doesn’t it make sense that that some merchant would be willing to pay more so they are guaranteed to be the ancient-sword supplier in the land? If he paid 70% market value, he would get *all* of the magic swords and still at a lower price than he himself could pay.

Taxes are the answer. The king just waves his hand and says, “All loot shall have an antiquities tax of 80% normal market price when resold.” That sword might be bought for 100 GP, but the merchant has to pay 80 GP when he sells it, so he can’t buy it for more than 20 GP.

Why tax like this? First, it keeps his people working. By taxing goods that are resold, there’s always demand for manufacturing and retail. Looting would otherwise wreck the economy – imagine what would happen to the sword industry if the PCs could sell at full price the 132 +1 Longswords they just swiped from the lich’s vampire spawn guards.

Second, it imposes the tax on the adventurers, even though it’s technically paid by the merchant. The merchant makes as much money as he would selling a normal sword, so no loss for him, and he probably gets more business, since the adventurers might as well by their own new junk from the guy buying their loot. It’s the PCs who pay by doing the work and only keeping 20% of the return.

The other way to tax heroes is by inflating the price of magic item components. If the kingdom goes around buying up all the residuum it can, the PCs have to pay more to buy it, and thus pay more for every single magic item they use. This is probably the easiest and most invisible way of taxing adventurers – just have your nobles buy up the magic dust to hoard or resell. The heroes pay more, but they have better things to do than fight a globally-supported price-floor.

#7 Comment By Tony Graham On April 15, 2009 @ 12:21 pm

In fantasy settings I’ve frequently used a gate fee for entering walled cities – a levy against anyone not bringing food supplies into the city – as a method of taxing players. Otherwise I’ve tried to ignore taxes in fantasy games since escaping reality is a goal therein.

One occasion I did hit a party with a tax: it was in a situation where the players had inhabited a inn for well over a year (game time) and acknowledged the local Duke. When the Duke declared war on his neighbor, the party was given a choice of military service (no legitimate right to loot) or a steep tax. They took service, and it led to a series of adventures in the service of the Duke. Despite a long lived crisis-of-conscious for the party paladin (politics and nobility seldom coincide), the players had a blast, became relatively poor, and became somewhat famed as the Duke’s henchmen. After the open conflict ended, they eventually fled the vicinity to escape the unwanted attention from the Duke’s enemies. Faced with a similar situation months later, they unanimously choose to pay an onerous tax rather than spend time serving in the City Militia.

In a cyberpunk or futuristic setting, taxes are an effective lash to get players in motion, although not always in the direction you might have intended…

#8 Comment By mlund On April 15, 2009 @ 1:07 pm

Collecting income taxes from adventurers is really troublesome. Generally you can’t pin them down to assess their earnings reliably – or even find them to tax them.

Instead as a ruler you have to make the adventurers come to ~you~.

In Nyrond in the days of Living Forgotten Realms adventurers were required to be licensed. The writ of license had to be reauthorized on a yearly basis, so the crown collected a levy on every official adventure inside the kingdom. That works pretty well for low-level characters.

For higher-level adventurers you need to be a bit more creative. Typically the larger sums powerful PCs generate translates into more expensive purchases. Items of such value might be subject to additional sales taxes or even require additional licenses to acquire. In some cases access to certain kinds of transactions might require joining the landed class – even as a Yeoman. That means Property Taxes and having a Feudal Lord.

Free-ranging PCs might find this a bit stifling, but a king would have to be some kind of complete moron not to keep a finger in the pie of every band of folks with enough fire-power to raze a province.

#9 Comment By SanctaIra On April 17, 2009 @ 6:15 am

The U.S. is a low tax country? As a political science/history teacher I have to say I’m rather disturbed by that misstatement.

The U.S. has one of the highest corporate taxes in the world, and in the 70’s we had a tax bracket that took 90% of a person’s income above a certain level. 90%! It has obviously come down since then, but to call the U.S. a relatively low-tax country really shows a lack of understanding in regard to the true impact of taxes at all levels, not just the individual income tax.

#10 Comment By Sarlax On April 17, 2009 @ 10:05 am

It’s mostly unrelated to the topic, but the amount of taxes paid as a function of GDP tends to sit just under 30%, which is on the low-end. It’s not reasonable to measure only the highest tax bracket from thirty years ago, nor simply to count income taxes. At the end of the day, taxes are about the state deliberately taking money you would otherwise have, so you have to measure income taxes, ad valorem taxes, excise taxes, property taxes, etc. When you sum up all revenues collected at all levels of government and divide it over GDP, the US comes out lower than average.

Corporate taxes are also difficult to evaluate. The U.S. has one of the highest nominal corporate tax rates, but the effective rate of taxation is lower because of shelters.

To shoehorn this back on track, I think the kinds of debates that arise over taxation demonstrate nicely how adventurers won’t be able to navigate around them. Since a kingdom can tax the wealthy through so many convoluted means, there’s no obvious way to get around them. IE, the state makes the work so hard that it’s not worth an adventurer’s time.

I wonder if there’s an adventure in here. A band of heroes might struggle against a bandit hoard for years, only to eventually learn that what’s really kept the common man in poverty is a crushing tax burden – but what do they do about?

#11 Comment By Kurt “Telas” Schneider On April 18, 2009 @ 12:56 am

I’d like to point out that the exact quote is, “[T]he US, [is] generally considered a low-tax nation…” :) The conventional wisdom is neither necessarily conventional nor wise.

(profanity-laden comments about taxes replaced by a smiley face)

:)

#12 Comment By LordVreeg On April 19, 2009 @ 2:39 pm

I always enjoy Sarlax’ slight meanderings, especially since they follow my general understanding.

As to being back on topic, all of the countries of the Celtrician Cradle area (my main playing area) have different taxation systems and levels. My main group plays in Igbar, in the country of Trabler, the Unicorn State. Trabler set a standard currency a few years ago, and any other forms of currency had to be changed (which cost 10% of the value changed, half of whcih went to the state). Did I mention Trabler is only 22 years old? Since any adventuring into abandoned areas ends up netting older coinage, this one has always been an easy way to give a realistic way for the government to fucntion.

In addition, there is a tax placed on an item that is sold for coin or writ, 25% in Trabler. Since we play in a setting where only very weak magic is common, much of a players fortune comes from the selling of rare items.

I also need to point out that it is important to understand the effect that adventurers might have on an area. This is the topic of another whole conversation, but it is very serious. Inflation can be a riot, at least in the fantasy world….

#13 Comment By Bercilac On April 25, 2009 @ 8:45 pm

Regarding taxation in Medieval Europe,

The first and second estates (church and nobility) were exempt from taxation right up until the bourgeois revolutions.

In the early middle ages (say, until the 12th century), taxes were in kind: peasants had to either provide a certain share of their crops or work a certain number of days on the land of their lord. These lords, in turn, owed a certain number of days of military service (themselves and their knights, as well as a certain number of non-noble baggage handlers, squires, archers, footmen, etc) per year.

The entire economy of this period was based on land ownership. As the PCs neither own land nor work the land, they’re actually quite a-historic. The closest parallel is the private mercenary companies that arose in the 14th and 15th centuries, mostly due to soldiers laid off in the 100 years’ war. The “Free Companies,” as they were called, rampaged around southern France and northern Italy basically doing as they pleased.

How did the kings deal with this? Principally by building a state. The French King (can’t remember who, do your research!) essentially hired one company to exterminate all of the others, and then kept them on permanent service, stationed in barracks (another new invention, as well as the state) around France, not so much for national defence as to keep them out of mischief.

In Italy, mercenaries were frequently used in wars between the city-states. Of course, most of these companies figured out (as PCs sometimes figure out) that their employers were entirely dependent on them for protection. So they conquered those cities and the mercenary captains set themselves up as Princes and Dukes and what have you.

It would be quite a-historical for a “medieval” setting to have a corporation or income tax. Tolls and customs were popular, because they relied on controlling fixed geographic points, which the kings could manage. But so was smuggling. Eventually, as the kings grew more powerful, states emerged, and the military was increasingly professionalised, the monarchs would levy taxes on their nobles and merchants, who were basically tied to their holdings and businesses, and had SOME kind of common interest in the defence of the realm. But it wasn’t uncommon for these sectors of society to refuse payment (it was this kind of dispute between Royal and Parliamentary authority that led to the English Civil War).

Soooooo I wouldn’t go about taxing PCs too much. Or, if you’d like to, give them land first. Then decide whether your campaign is early or late medieval. If it’s early, you have a great excuse for an adventure: the king demands his 90 days military service. If it’s late, he’ll demand regular cash payments to hire mercenaries, but they would be fixed, not as a percentage of income. Remember, they don’t have to get a lot of land, and this land won’t generally bring them a lot of outside income. Just one manor for one party member, with the rest recognised as his or her retainers, would be enough.

In the middle ages, war was immensely profitable. Loot and ransom meant quick, untaxable cash in a hurry (though sometimes the king demanded a pick of prisoners to be ransomed, as Henry V after Agincourt). The PCs are basically a private mercenary company that causes relatively little trouble (by going after the “bad” mercenaries, bandits, heretics, pagans, etc) and is constantly on campaign. So of course they’re going to become enormously wealthy. If you want them to feel the crunch, try putting them through a dry spell of treasure. Then see if they get more ruthless in their pursuit of material gain, and if they come into friction with the power of the local lord (who they might be able to topple) or the regional monarch (who they might not).

#14 Comment By Kurt “Telas” Schneider On April 25, 2009 @ 9:46 pm

@Bercilac – Lots of interesting info there, but I have a degree in Economics.

I know it’s not necessarily so, but the word ‘bourgeois’ reminds me of Marx, which makes me sigh and shake my head, and go do something, anything else.

#15 Comment By Tacoma On July 21, 2009 @ 5:45 pm

30-80% is way too high. Nobody would agree to that if they had the choice. I’d be upset if I knew I’d lose four gold out of five when I step out of the dungeon.

The standard method of taxation where some official approaches the adventurers and demands a portion of their earnings never flies. You either have reasonable and realistic officials, or uber-tough officials.

If the officials are reasonable the party refuses, the officials insist and attempt arrest, and then quickly perish. If the officials are unreasonably powerful, the party ends up dead or in jail.

The taxation where you have the merchants pay and pass the cost on to the adventurers is marginally better. But that’s what black markets are for. Suddenly the players are dealing with smugglers, which is cool, but then the extra cost of dealing with the black market can’t be anywhere near as high as actually paying the tax. If the tax adds 50%, the black market can’t possibly add over 20% instead. So you’re much closer to square one than you hoped.

Simply put, as a player I recognize when I’m in a monty haul or when I’ve gotten too good of a haul, and I blow it on stupid stuff to balance things out. I’m reasonable. So if the GM tries to tax me I’m just going to start pinching pennies like crazy to make it all balance out. Again, you’re back to square one.

Back to the issue of enforcement, how do the tax officials know how much money I made? Our current tax system is difficult to scam reliably because banks collude with it to track the movements of money. No banks, no tracking, no information. Or do the tax-men constantly scry all the dungeons and adventurers, able to pierce lead-plated treasure chests? I’d call that magical assault and get my lightning bolt wand ready.
Again, if the officials are super-powerful and omniscient you cannot avoid the tax. But if they’re so powerful why don’t they kill their own Orcs? If every town guard is a 6th level Fighter, why are there any monsters left in the whole wide world? As a player in a game like that, I don’t feel like it’s gritty and realistic, I feel like the entire world is designed to keep my nose firmly on the GM’s rails.

Simply put, either your world is legitimate and I can avoid your tax, or your world is oppressivly full of Mary Sues and I leave to find a game run by an adult. I’m not willing to kowtow like that, nor am I willing to waste time rolling up characters in continual TPKs with the law.

There’s a reason I’m not playing Papers and Paychecks.


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