I belong to, and love playing in,
Second Life. It's a virtual world where you can have a business, earn virtual dollars, called Linden dollars or Lindens for short, and, at a very high rate of exchange, turn them into US$. I don't have a business, I just buy my Lindens for about $4 for L$1000. With the Lindens I pay rent on my virtual house, by the water, indoor pool and sauna, a real dream house..LOL I also buy great clothes and have fun chatting and playing with my friends all around the world. I stay up late sometimes to chat with my Asian friends who come on late at night, my time. It's a wonderful and fun place to be. Now Congress is looking into taxing the virtual profits people make there..how weird is that??
The money isn't real until it's converted to US$, but they want to tax the virtual dollars and the virtual properties. This quote from the
Story on Second Life...
"Right now we're at the preliminary stages of looking at the issue and what kind of public policy questions virtual economies raise -- taxes, barter exchanges, property and wealth," said Dan Miller, senior economist for the Joint Economic Committee. "You could argue that to a certain degree the law has fallen (behind) because you can have a virtual asset and virtual capital gains, but there's no mechanism by which you're taxed on this stuff," he said."
Now, the entire economy of SL is generated by the people who are members, they build and create and then sell or rent their creations to other members. There is also a very big and booming "escort" business where avatars get paid for sex with other avatars. There are some interesting "parts" that one can buy that simulate sex, complete with arousal meters and orgasms. These can only be used in the "Mature" rated areas, use them in PG and you risk losing your account. Some people make a lot of money doing that..one woman made over L$500,000 in a year. This translated to about US$1000 in RL (Real Life). That is taxable, in my opinion, the $500,000 in Lindens is not.
I would be very interested to hear what the economists, tax experts and lawyers on DKos think about this. Personally, I think it's a crock. If it isn't tangible, how can you tax it? If it can be erased with a click of the mouse, how can they prove you "own" it? This quote interested me particularly...
For example, in Second Life up to US$500,000 in user-to-user transactions take place every day, and the economy is growing by 10 to 15 percent a month.
"Ownership, property rights, all that stuff needs to be decided. There's just too much money floating around," game designer Sam Lewis, who trained as an economist and has worked on games such as Star Wars Galaxies, said in a telephone interview. "The tax laws don't know how to behave because these are virtual items: ones and zeros on a database we're allowing you to play in," he said.
Tax laws don't know how to behave? With fantasy money??? Ok, that certainly fits into the "we make our own reality" meme..taxing money that isn't real. As I said, I would be interested to know if any of the experts in tax and economics on DKos have to say on this..any opinions????