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[Suggestion] Introducing a progressive tax scheme to the MUT auction house

by Neo_Novalis
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Original Post

[Suggestion] Introducing a progressive tax scheme to the MUT auction house

[ Edited ]

I definitely support the concept of refining the MUT auction house as it has been announced on June 25th 2021. From my perspective, an overhaul of the auction house is very important to avoid that cheaters exploit the auction house causing harm to all MUT players who want to play straight and fair. In addition, I’d like to suggest …

 

  1. the introduction of a progressive tax system instead of the currently applied flat tax (of 10%) for successful auctions in the MUT auction house.
  2. adding alternative modes or revising existing Solo modes allowing repeatedly playing with your MUT team while earning rewards (e.g. an additional MUT Solo Season mode, a revision of Solo Battles and Solo Challenges). I already posted some of my thoughts about a MUT Solo Season mode and how to improve Solo Battles and would like to write about my suggestions on Solo Challenges soon too.
  3. replacing the concept of NAT items (which remain NAT all the time) by a cooldown phase for auctioned (or bought) items, traded items and items received as Solo Challenge rewards (in other words, they are NAT only temporarily):
    • bought items from the auction house can only be offered for sale / auction after one week again.
    • traded items can only be offered for sale / auction after one month again.
    • items (incl. collectibles) received as rewards from completing Solo Challenges (which have been NAT in previous Madden versions) are treated as if they have been received via a trade.

What goals do I want to achieve with these suggestions?

  • Improve the fun of playing MUT for all players by allowing to sell traded again and make use of promo items if they (or other set items of the promo) are not interesting for you (and/or your theme team).
  • Decrease incentives of cheating via using secondary accounts or buying and distributing coins.
  • Reduce the negative effects of arbitrage in the auction house (I will explain the concept of arbitrage below).

I will not go into detail regarding part 2) of my suggestion since I already made some suggestions in the AHQ and the EA Madden forums. These suggestions are important complements to my suggestion because I think that players should have the chance to earn as many rewards and coins via playing depending on the time they are willing to invest into this game. Some more of my thoughts about the lack of opportunities to earn coins in Madden (except H2H modes) can be found here.

 

Regarding point 3), from my perspective this is an important feature to allow players enjoying the full range the MUT mode can offer. I love MUT because it is about enjoying a football game combined with collecting rewards, exchanging items with other players and completing sets to steadily improve your team (while I’m not interested in competing with other players). If a huge number of (promo-related) items to be gained through playing Solo Challenges cannot be used in trades or auctions, a lot of fun of the MUT mode is lost. I know that there are good reasons why this concept of NAT items had been introduced. There are just too many players who exploited opportunities which had not been targeted by the creators of this mode. For me, it is not a question whether exploiting these opportunities should be called cheating (as long as they have not been explicitly forbidden by specific rules) or whether it is just cleverness. It is more a question how the exploitation of these opportunities affects those players who just play the mode as it was intended by design.

 

In order to fulfil both functions, 1) allowing trades and auctions for all items, and 2) avoiding exploits of secondary accounts or coin distribution, I would like to propose a weakened form of the NAT concept. Players should be allowed to sell all items after a cooldown phase. In case of a traded item or an item which is rewarded via Solo Challenges, the cooldown phase should last about a month. In case of bought items (i.e. from the auction house), it should be about 1 week.

 

Why do I think a cooldown phase is necessary?

First, secondary accounts should not be attractive in terms of shifting promo (or other) rewards from one (ore even more) secondary account(s) to the primary account to easily complete promo sets. If a player buys coins or receives coins from other players or accounts without providing anything of comparable value in-game (but maybe receives or pays real-world money instead), (s)he acquires an unfair advantage over other players. Doing that might be illegal in some countries as well. If these items could be shifted from one account to another after a month only, it is not worth anymore to invest the time of playing in a secondary account (because the value of an item drops significantly as better items are released in the meantime). Instead, it should be allowed to play with your primary account as often as you want (that’s why we need additional Solo modes aka point 2)). In addition, if traded items cannot be sold immediately, it is much less attractive to transfer high value items from the secondary to the primary account because – again – the value of items strongly decreases as soon as other items (with higher OVR) are released. Second, buying coins is much more difficult if players could not trade items or sell them cheaply from A to B before transferring a large number of coins from A to B by rebuying the item again. I will come back to this point a bit later again.

 

Third, a cooldown phase would reduce the incentives of exploiting arbitrage in the auction house from buying items cheaply and selling them expensively. In principle, there is nothing wrong with someone buying products cheaply and then selling them more expensively if they perform for that price difference. For instance, in the real-world retailers buy products from suppliers to provide the products to customers where they need it. In other words, they provide the service of distributing products or shipping them from the place where the product has been produced to the place where it is demanded. This service is refunded by a higher price they charge when selling the products. The important difference between retail and arbitrage is, that in the latter case the trader does not provide any added value to the customer. The arbitrage using trader only exploits price differences without providing any service. As well as it is considered harmful in economic theory, it also harms those MUT players who end up buying the item for a higher price.

 

How does the suggested progressive tax model look in detail?

The core part of my suggestion is a progressive tax (i.e. auction fee) which should replace the flat tax (10%) as it is at the moment. In order to illustrate the concept of a progressive tax scheme, I created graphs and tables for 2 exemplary cases. They show the amount of taxes to be paid as well as the net revenues (shown on the y-axes) to be earned for an item of a specific quicksell value (in the examples I used a quicksell value of 500 and one of 50,000 respectively) depending on the price (shown on the x-axis) and compare the progressive tax scheme with the current flat tax of 10 percent.

 

The main idea behind a progressive tax is that the marginal tax rate (i.e. the tax rate you have to pay for a price increase of an additional coin depending on the price) increases with higher prices. While you do not pay any taxes for the first coin you earn from the sale, a mediocre tax rate is applied for an additional coin for a average price and a very high tax rate is applied for an additional coin at a very high price. I’d like to explain this concept by splitting the first example into pieces (see also the attached tables).

In the model I’ve chosen, a player does not have to pay any taxes if the price is zero (tier 0 in the table) and as long as the price is either lower than the quicksell value (in training) or – if the quicksell value (qv) is smaller than 500 – it is lower than 500 coins (tier 2) in the table). If the price is between 500 (= 1*qv) and 2.5k (= 5*qv), a marginal tax rate of 0.5% is applied (tier 3). This means that the total tax increases by 0.5% * 2,000 (= 2,500 – 500 because the value of 500 coins is tax-free). The total tax of an item (with qv = 500) which is sold for 2,500 coins would be 10 coins (or 0.4% of the price). If the price is between 2,500 and 5,000 (= 10*qv), a marginal tax rate of 1% is applied (tier 4). Again, to calculate the total tax amount, we firstly deduct the 2,500 from the full price of 5,000 (because for this amount a lower tax rate has been used). From the remaining 2,500 coins, a marginal tax rate of 1% results in additional taxes of 25 coins. In total, adding the 10 coins from before, the total tax for selling the item for 5,000 coins would equal 35 coins (which is much lower than if we applied the flat tax of 10% => 500 coins). The additional tax tiers follow the same concept. We deduct the previously considered amount to calculate the additional marginal tax when applying the tax rate of the next tier respectively. Using a formular, the total tax (depending on the price could look like:

 

Total tax = 0 * (500 – 0) + 0.5 * (2,500 – 500) + 1 * (5,000 – 2,500) * 2.5 * (10,000 – 5,000) + …

            ~ marginal tax rate(tier 1) * (upper bound(tier 1) – lower bound(tier 1)) + …

 

Tax rates and upper and lower bounds of each tier (i.e. the parameters) can be chosen as desired or meaningful for the overall auctioning system. I could also imagine that the parameters might be adjusted during a MUT season (e.g. when a new series is released) to adjust for decreasing prices of early released items. In my examples I tried to choose the parameters to have a similar average tax rate for reasonable prices as it would be if a 10% flat tax rate is applied. The only important thing is that the marginal tax rate increases (or at least does not decrease) with higher tax tiers. Calculating the tax tier-wise (and not as a direct function of the price) prohibits that the seller always increases his net revenues as long as the price increases, but on the other hand the increase becomes smaller and smaller the higher the price already is.

 

In my examples, both tax schemes (the flat tax and the progressive tax) would result in about the same average tax in tier 10. This would equal a price of about 30,000-35,000 coins for an item with a quicksell value lower or equal than 500 (because I defined the tax-free first tier as 0-500) and about 3-3.5 Mio coins for an item with a quicksell value of 50,000 training. If the items are sold for a lower price than the respective benchmarks, the progressive tax scheme would result in higher net revenues for the seller if compared to the net revenues resulting from the current flat-tax of 10%. If the price is higher than the benchmark, the seller would be better off with the current flat-tax model.

 

Why do I think that a progressive tax scheme would be beneficial for the MUT auction house?

First, a progressive tax scheme would reward those who sell their items at a fair price, or – in case that (s)he has unintentionally set a price too low – (s)he would at least have to pay only a fairly small amount of additional tax. Second, the progressive tax scheme would punish greedy players who sell their items for horrendous prices when compared with the quicksell value. Third, punishing sales for horrendous prices would also make coin selling much more difficult because the seller would either have to accept a huge loss of coins due to a very high tax rate (if low-value items are sold for millions of coins) or the selling process would require either making use of high-value items (to reduce the marginal tax rate for high prices) or repeatedly sell low-value items (for a comparably high price but with an acceptable – from the perspective of the cheater – average tax rate). In the first case, the transaction might be acceptable from a systemic viewpoint since the seller of an item (i.e. the coin buyer) has to exchange an item of value for the coins. In the latter it should be easy to correctly identify intentional cheaters without risking to punish innocent players as well.

 

Here I would like to come back to my argument why a cooldown phase for traded and auctioned items might be meaningful. If players could buy and resell items without any restrictions, coin selling/buying could still be feasible by transferring one and the same item back and forth. That’s why I’ve argued above that a NAT cooldown phase should be implemented for auctioned and traded items although in principle, from the perspective of a player, I would prefer all items and collectibles to be traded or sold without any restrictions.

 

That’s why I suggest

 

  1. replacing the introduction of a progressive tax system instead of the currently applied flat tax (of 10%) for successful auctions in the MUT auction house.
  2. adding alternative modes or revising existing Solo modes allowing repeatedly playing with your MUT team while earning rewards.
  3. replacing the concept of NAT items (which remain NAT all the time) by a cooldown phase for auctioned (or bought) items, traded items and items received as Solo Challenge rewards (in other words, they are NAT only temporarily):
    • bought items from the auction house can only be offered for sale / auction after one week again.
    • traded items can only be offered for sale / auction after one month again.
    • items (incl. collectibles) received as rewards from completing Solo Challenges (which have been NAT in previous Madden versions) are treated as if they have been received via a trade.

From my perspective, my suggestions perfectly fit into the new range system announced today, although I developed it without knowing that there will be this new range system in Madden 22. Funnily enough it has been announced exactly at the same day when I finished writing down my suggestions. I think that this progressive tax scheme could be either 1) used to define the price ranges (or the other way round: i.e. the price ranges are used to define the parameters of the progressive tax scheme), or 2) amend the price ranges. At the moment I’m not aware of any reason why it should not be possible to replace the flat-tax with the progressive tax. The price ranges could still be defined as hard limits (i.e. no auctions are allowed above or below the thresholds), or alternatively could be used for providing information only, e.g. if the upper bound of the price range signals a specific marginal tax rate (for instance 20%). I’d really be interested in developing these ideas further and would like to hear your feedback!

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Message 1 of 5 (439 Views)

Re: [Suggestion] Introducing a progressive tax scheme to the MUT auction house

★★ Novice

Horrible idea in my opinion. The 10% tax is absolutely fine.

Message 2 of 5 (359 Views)

Re: [Suggestion] Introducing a progressive tax scheme to the MUT auction house

@Mutcat1 Thank you for sharing your opinion! Why do you think that my suggestion is a "horrible idea"?

____________________________________________________________________________________
        Positive Play - Feel the emotions, but be aware what they are telling you!
Joy: you like it! Anger: you don't like it! Frustration: you don't like it but cannot do
     anything against it! Aggression: you don't like it and want to break something.
____________________________________________________________________________________
                   Tell everybody (@joy), give constructive feedback (@anger),
                    ask for help (frustration), and have a break (@aggression)!
                     I try to help out other players, but I'm not an EA employee

Message 3 of 5 (345 Views)

Re: [Suggestion] Introducing a progressive tax scheme to the MUT auction house

★★★ Newbie

A progressive tax is a fair idea, but you have it incorrect. Just like IRL the progressive tax affects you based on income, not on the price of the item you sell. For example IRL if you sell $20,000 of stock of Electronic Arts, there is not a set amount of tax on that amount. Rather the tax paid is based on the income of the person who profited. Therefore in Madden the progressive tax should be based on the revenue of the gamer, not the value of their items sold.

 

For example if I do nothing but flip cards on the AH all week and I buy and resell 10 mil coins worth of cards, I think my tax rate should increase exponentially, to the point where it becomes prohibitive to flip more cards because the tax rate will exceed the potential profit margin.

 

However for the casual player just looking to adjust their team and buy and sell a couple cards per week, they should basically pay 0% tax.

 

The progressive tax of each gamer should reset weekly, just like income taxes reset on an annual basis.

Message 4 of 5 (301 Views)

Re: [Suggestion] Introducing a progressive tax scheme to the MUT auction house

@B0LDwittyNAME Thank you for sharing your opinion! Standard smile

I fully agree that progressive taxes are most often used to tax total income (i.e. personal income taxes) and are not used for single transactions (like value added taxes, for instance). In addition, the starting point of my idea was also income taxes.

However, I think that in the case of the MUT auction house (I'd guess it would be a good idea for other games as well, such as FIFA Ultimate Team) the progressive tax should be applied to transactions anyways. From my perspective, one of the main reasons for a progressive transaction tax is the fact that it punishes greedy (or cheating) players who make use of market power (or in worst case sell coins for real cash) in order to sell items for horrendous prices.

For instance, if a player offers a low silver item for millions of coins just because (s)he made a deal paying real cash for the coins (s)he receives for this transaction, (s)he should not receive the large amount of coins. This would make it much more difficult for cheaters who want to exploit the game for earning real cash (while at the same time sabotaging the market in the game). Unfortunately, following the forum discussions over the last years, coin selling seemed to be a huge issue. Frown

On the other hand, if a player sells a lot of items for fair prices (just because (s)he invests a lot of time in the game and maybe bought a lot of packs) and therefore has a similar (weekly) income in terms of coins (compared to the cheating player), (s)he should not be punished by higher taxes.

That's why I think the progressive tax scheme should be applied to transactions and not to total income (per week, for instance).

____________________________________________________________________________________
        Positive Play - Feel the emotions, but be aware what they are telling you!
Joy: you like it! Anger: you don't like it! Frustration: you don't like it but cannot do
     anything against it! Aggression: you don't like it and want to break something.
____________________________________________________________________________________
                   Tell everybody (@joy), give constructive feedback (@anger),
                    ask for help (frustration), and have a break (@aggression)!
                     I try to help out other players, but I'm not an EA employee

Message 5 of 5 (166 Views)
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