Taxes Anyone?
In a report from abcnews.go.com James Turner reports on Earning a Second Income on Second Life
What I found most interesting is the question of taxes on Second Life income is being questioned.
James Turner reveals…
The US House Joint Economic Committee has recently undertaken an investigation of the entire question of virtual economies, according to Dan Miller, a senior economist working for the committee. An avid user of virtual worlds (notably the most popular MMORPG, World of Warcraft), Mr. Miller is studying how tax policies might be adjusted to account for this new digital world. He plans to issue a report this spring.
Some things are pretty clear. “The income tax already applies to income that is removed from virtual economies,” he writes in an e-mail as in when an SL user converts lindens back into US dollars. But the subject of taxing assets inside SL is more controversial, he says. “Based on our initial assessment of virtual economies … virtual worlds need greater clarification, not additional taxation,” he writes. “Governments have a hand in regulating many aspects of physical economies to one degree or another, while the government’s presence in virtual worlds is relatively minor.”
Also brought to light in that ABC article: this quote coming from the Justice Department.
Some SL businesses already may be operating outside current law. Casino gambling and sports betting are pervasive in SL. The fact that bets are made in lindens, not dollars, won’t shield gamblers from possible prosecution under federal laws banning Internet gambling, says Jaclyn Lesch, a spokeswoman for the US Justice Department. “Regardless of how one pays for the bet, it is still a bet if it involves something of value. While not a credit card or cash, [virtual currencies] would still be a thing of value” especially considering the fact that they are later redeemed for cash.
This should give all of us some more thing to mull over for a few days. Remember your comments, questions, or rants are welcome in the comment section… as long as they aren’t pure spam….
Please take the time to let me know you read this and maybe have an opinion.
January 24th, 2007 • 
Weirdharold • 
comment | January 24, 2007 at 09:04 | individual comment-link
I’m entirely unclear on what they think they need to tax or define.
A business in VR is no different than a store with gift certificates or tokens at the arcade or dollars to spend at the amusement park.
comment | January 24, 2007 at 10:33 | individual comment-link
One of the side topics that interests me is whether govt regulation of virtual worlds will work out differently than the internet since VWs so far have a single company or source running them. Will they be by company location? Or server location? Or by the locale of the people involved? Do the laws of California apply to the activities inside SL?
comment | January 25, 2007 at 04:30 | individual comment-link
Crissa— Governments only want to put as much money in their coffers as they can conceive ways of doing so. I don’t think it matters much to them what would be right or wrong, to them they see figures saying X amount of US dollars spent today on the Second Life web page and simply want to put out their hand.
Storm Thunders–Good question! Just like the Real world… our virtual worlds are stretched around the Earth, and it would seem unfair to try to impose any real world standards into an interaction of people who are attempting to escape the tightening coil of suppression the real world imposes upon all of us.