Will Virtual Worlds be Taxed?
The BBC website reports here that the U.S. Joint Economic Committee is looking at the trade taking place in interactive computer gaming societies like Second Life or Eve Online. Apparently the economies in these societies can be fairly sophisticated, the sum "GDP" rivaling small countries like Namibia, and they are becoming large enough to attract the eye of the state. The JEC claims they are not doing this with an eye toward taxing these economies:
Some players of these games have amassed huge fortunes of game currency by exploiting the quirks of the virtual world's monetary and trade systems.
There are reports that many people in nations such as China earn their entire salary by "gold-farming" in which they play the game solely to get gold which is then sold for real world money.
The JEC statement said: "Clearly, virtual economies represent an area where technology has outpaced the law. The goal of the forthcoming JEC study is to help lawmakers understand the issues involved and head off any premature attempt to impose a tax on virtual economies."
We'll see whether the government can resist taxing these societies. So far their record of foregoing taxes on transactions is not encouraging. In any case, it would be interesting to see what these economies look like, and what role a state plays in them. At least some work has been done. Here's an old Mises blog post on the subject. I'm sure there's more.
Comments (3)
James Redford
The tax laws already apply to these online gaming societies when their players make real-world purchases involving real-world currency. In the U.S., sales taxes don't apply to interstate purchases.
What would be truly bizarre is if governments started taxing fictional-world money transactions. So, e.g., one couldn't play a game of Monopoly without being taxed in real life (and in the currency of the applicable nation, i.e., in U.S. dollars if one is playing the game in the U.S.) based upon the Monopoly-money transactions one makes while playing that board game.
Published: October 19, 2006 4:12 PM
Manuel
Don't give them more ideas!
Published: October 19, 2006 4:42 PM
Vanmind
Next week my business partner is going to be on a CBC-TV "morning news" program in Montreal, part of a local segment about realistic online environments and the future of education.
For over twelve years now--since back when even the so-called experts had no clue--I've been trying to help the world get hip about this stuff and more. I hope my partner gets a chance on-air to mention our business.
Published: October 20, 2006 2:38 AM