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  1. #1

    Congress to look into taxing virtual worlds

    http://news.com.com/2061-10797_3-612670 ... &subj=news

    I hope they make IGE pay back taxes.

  2. #2
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    Congress to look into taxing virtual worlds
    October 17, 2006 11:43 AM PDT

    For at least the past couple of years, one of the biggest questions in virtual world circles has been whether or not the U.S. government would ever get around to noticing the potential tax windfall of the multi-hundred-million-dollar virtual economies of "Second Life," "EverQuest," "World of Warcraft" and the like.

    Some in the community have even gone so far as to try to get the IRS to weigh in on the issue.

    Well now, reports Reuters' new "Second Life" reporter, Adam Pasick, Congress has finally gotten wise, and may be on the verge of taking some sort of action.

    "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," Dan Miller, senior economist for the Joint Economic Committee, told Pasick. "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."

    Of course, no one has ever questioned whether real capital gains from economic activity in virtual worlds is taxable. Thus, if a player makes a real profit by buying and selling digital goods such as weapons, buildings, vehicles and the like, they must, under the law, declare the income.

    The bigger and so far, unanswered question, has been whether economic gain that is stored in virtual currencies and property is taxable. And that appears to be what Congress may be looking at.

    For the time being, it's still way too early to tell what will happen. But for anyone who is digital-asset rich and cash poor, it might be a good idea to start saving a little for the taxman. Just in case.
    I quoted the article here because it really wasn't that long.

    So, the US government is thinking about possibly taxing virtual property? What a fucking joke. First off, it's virtual. Yes, some people may attach a real-world dollar amount to virtual property, but in order for this to be properly taxed, there has to be hardcore regulation of said virtual property. I can only imagine the consequences that trying to tax a virtual system would have. They mention taxing assets and gains, but what of tax breaks over virtual losses? How retarded is the government? (Don't answer that.)

    Imagine this scenario: all it would take is someone like Blizzard (biggest MMO in the US) to trump an existing and super expensive (just for argument's sake we'll say 100,000 gold) item, and trump it with several other alternatives that drop off some low-level mob. If the real-world value of 100,000 gold is $5,000 (I have no idea, this is just for the sake of argument) can people claim a $5,000 loss on their taxes because they were taxed on that $5,000 last year? What about regulating foreign-based games (hi2u FFXI), or dupe-hacks, exploits, etc.?

    There's WAY too many easily manipulated variables in a player-controlled virtual economy to even wildly speculate how to tax it in the real world. The government needs to just stop this idiotic line of thinking before any more money is wasted on their "probe" into it.

  3. #3

    Quote Originally Posted by Fhqwghads
    Congress to look into taxing virtual worlds
    October 17, 2006 11:43 AM PDT

    For at least the past couple of years, one of the biggest questions in virtual world circles has been whether or not the U.S. government would ever get around to noticing the potential tax windfall of the multi-hundred-million-dollar virtual economies of "Second Life," "EverQuest," "World of Warcraft" and the like.

    Some in the community have even gone so far as to try to get the IRS to weigh in on the issue.

    Well now, reports Reuters' new "Second Life" reporter, Adam Pasick, Congress has finally gotten wise, and may be on the verge of taking some sort of action.

    "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," Dan Miller, senior economist for the Joint Economic Committee, told Pasick. "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."

    Of course, no one has ever questioned whether real capital gains from economic activity in virtual worlds is taxable. Thus, if a player makes a real profit by buying and selling digital goods such as weapons, buildings, vehicles and the like, they must, under the law, declare the income.

    The bigger and so far, unanswered question, has been whether economic gain that is stored in virtual currencies and property is taxable. And that appears to be what Congress may be looking at.

    For the time being, it's still way too early to tell what will happen. But for anyone who is digital-asset rich and cash poor, it might be a good idea to start saving a little for the taxman. Just in case.
    I quoted the article here because it really wasn't that long.

    So, the US government is thinking about possibly taxing virtual property? What a fucking joke. First off, it's virtual. Yes, some people may attach a real-world dollar amount to virtual property, but in order for this to be properly taxed, there has to be hardcore regulation of said virtual property. I can only imagine the consequences that trying to tax a virtual system would have. They mention taxing assets and gains, but what of tax breaks over virtual losses? How retarded is the government? (Don't answer that.)

    Imagine this scenario: all it would take is someone like Blizzard (biggest MMO in the US) to trump an existing and super expensive (just for argument's sake we'll say 100,000 gold) item, and trump it with several other alternatives that drop off some low-level mob. If the real-world value of 100,000 gold is $5,000 (I have no idea, this is just for the sake of argument) can people claim a $5,000 loss on their taxes because they were taxed on that $5,000 last year? What about regulating foreign-based games (hi2u FFXI), or dupe-hacks, exploits, etc.?

    There's WAY too many easily manipulated variables in a player-controlled virtual economy to even wildly speculate how to tax it in the real world. The government needs to just stop this idiotic line of thinking before any more money is wasted on their "probe" into it.
    You're actually already supposed to declare any earnings you get from selling stuff to IGE et al for RL cash.

    IGE should be declaring its earnings too, for taxation.

  4. #4
    Ridill
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    Quote Originally Posted by Fhqwghads
    There's WAY too many easily manipulated variables in a player-controlled virtual economy to even wildly speculate how to tax it in the real world. The government needs to just stop this idiotic line of thinking before any more money is wasted on their "probe" into it.
    These are the same people who think that the internet is made up of tubes that can be clogged up. Fear.

  5. #5
    Banned.

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    Quote Originally Posted by Fhqwghads
    I quoted the article here because it really wasn't that long.

    So, the US government is thinking about possibly taxing virtual property? What a fucking joke. First off, it's virtual. Yes, some people may attach a real-world dollar amount to virtual property, but in order for this to be properly taxed, there has to be hardcore regulation of said virtual property. I can only imagine the consequences that trying to tax a virtual system would have. They mention taxing assets and gains, but what of tax breaks over virtual losses? How retarded is the government? (Don't answer that.)

    Imagine this scenario: all it would take is someone like Blizzard (biggest MMO in the US) to trump an existing and super expensive (just for argument's sake we'll say 100,000 gold) item, and trump it with several other alternatives that drop off some low-level mob. If the real-world value of 100,000 gold is $5,000 (I have no idea, this is just for the sake of argument) can people claim a $5,000 loss on their taxes because they were taxed on that $5,000 last year? What about regulating foreign-based games (hi2u FFXI), or dupe-hacks, exploits, etc.?

    There's WAY too many easily manipulated variables in a player-controlled virtual economy to even wildly speculate how to tax it in the real world. The government needs to just stop this idiotic line of thinking before any more money is wasted on their "probe" into it.

    I dont think it's about the value of the item/char itself, but about the profit/lost you made in the end.

  6. #6
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    basically, if they act on this. you might want to pass on the Ridill because winning lot on it would increase your character's value and than the IRS would come and make you pay.

    it's almost like a gilbuyers dream come true actually.

  7. #7
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    Quote Originally Posted by Septimus
    Quote Originally Posted by Fhqwghads
    There's WAY too many easily manipulated variables in a player-controlled virtual economy to even wildly speculate how to tax it in the real world. The government needs to just stop this idiotic line of thinking before any more money is wasted on their "probe" into it.
    These are the same people who think that the internet is made up of tubes that can be clogged up. Fear.


    Oh man, I dunno whether to laugh at that or allow my head'asplode from the sheer stupidity of those people. I guess I'll laugh, because I'm all out of aspirin.

  8. #8
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    Quote Originally Posted by Kaylia
    Quote Originally Posted by Fhqwghads
    I quoted the article here because it really wasn't that long.

    So, the US government is thinking about possibly taxing virtual property? What a fucking joke. First off, it's virtual. Yes, some people may attach a real-world dollar amount to virtual property, but in order for this to be properly taxed, there has to be hardcore regulation of said virtual property. I can only imagine the consequences that trying to tax a virtual system would have. They mention taxing assets and gains, but what of tax breaks over virtual losses? How retarded is the government? (Don't answer that.)

    Imagine this scenario: all it would take is someone like Blizzard (biggest MMO in the US) to trump an existing and super expensive (just for argument's sake we'll say 100,000 gold) item, and trump it with several other alternatives that drop off some low-level mob. If the real-world value of 100,000 gold is $5,000 (I have no idea, this is just for the sake of argument) can people claim a $5,000 loss on their taxes because they were taxed on that $5,000 last year? What about regulating foreign-based games (hi2u FFXI), or dupe-hacks, exploits, etc.?

    There's WAY too many easily manipulated variables in a player-controlled virtual economy to even wildly speculate how to tax it in the real world. The government needs to just stop this idiotic line of thinking before any more money is wasted on their "probe" into it.

    I dont think it's about the value of the item/char itself, but about the profit/lost you made in the end.
    Right, but there's very few games that have a direct cash money = virtual item value. Station Exchange, and I think one other game that is completely based off of real world purchases of virtual property? How can they tax people on what they earned in an economy that was never set up for that type of environment? It's almost like they'd have to have a finite value on time itself (i.e. the time people spent earning an item vs. the value of the item.) Not to mention that for many situations, property is obtained via a random number generator.

    I mean, the mapping of taxes->real money->virtual property is a mind-bogglingly complex process that would have to place rules on the developers of these games so that some sort of semi-predictable economic climate could be generated in order for it to be even remotely feasible. Considering many MMOs are made overseas, I doubt that kind of regulation is possible.

    However, if laws are passed because someone magically solved all these problems, SE would finally have concrete evidence of RMT, haha! Declare profits/losses off of SE and get banned! Don't do it, and get audited, haha! (Works for U.S. citizens, anyway.)

  9. #9

    Obtaining a ridill/whatever wouldn't be taxed until you cash out.

    http://en.wikipedia.org/wiki/Capital_gains
    "Currently in the US, unrealized capital gains are not subject to income tax."

  10. #10
    Ridill
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    Quote Originally Posted by aurik
    Obtaining a ridill/whatever wouldn't be taxed until you cash out.

    http://en.wikipedia.org/wiki/Capital_gains
    "Currently in the US, unrealized capital gains are not subject to income tax."
    The bigger and so far, unanswered question, has been whether economic gain that is stored in virtual currencies and property is taxable. And that appears to be what Congress may be looking at.
    This line seems to run contrary to that.

  11. #11

    Quote Originally Posted by Septimus
    Quote Originally Posted by aurik
    Obtaining a ridill/whatever wouldn't be taxed until you cash out.

    http://en.wikipedia.org/wiki/Capital_gains
    "Currently in the US, unrealized capital gains are not subject to income tax."
    The bigger and so far, unanswered question, has been whether economic gain that is stored in virtual currencies and property is taxable. And that appears to be what Congress may be looking at.
    This line seems to run contrary to that.
    I would say something about treating MMO holdings as having real, immediately taxable value being "criminally stupid", but this is the US congress we're talking about here...

  12. #12
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    I've been hearing about this for a while. My thoughts: If you turn a real world profit from the sale/transfer of virtual goods/currency then yes, you are subject to taxation. It's income, earned or not, and the government has it's right to tax that. Fuck you IGE. As for taxing a person based upon the appraised worth of their character or account, this is idiocy. If you aren't turning a profit, then you aren't participating in the real world economy, and have no obligation to pay taxes. Who is qualified to appraise your account anyway? However, if you read the EULA, in the case of FFXI, your character and all it's accoutrements are the property of Square-Enix in the first place, so you wouldn't have to pay taxes on that anyway.

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