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Congress to Revisit Virtual Goods Taxation
Posted by
Zonk
on Sat Jun 23, 2007 06:48 PM
from the rollercoaster-of-anti-fun dept.
from the rollercoaster-of-anti-fun dept.
News.com has the word that congress is set to re-visit taxing virtual goods, a concept they shelved a while back in order to consider the matter more fully. That's given the Congress' Joint Economic Committee time to come to a decision about what exactly the value of virtual goods means for players and game-makers. An economist with the group told CNet to expect their report sometime next month. "What that report will say is unknown, as the committee has kept entirely quiet about its thoughts. However, it's clear that something will happen. 'Given growth rates of 10 to 15 percent a month, the question is when, not if, Congress and IRS start paying attention to these issues,' [senior economist Dan] Miller, who is a fan of virtual worlds and economies, told CNET News.com in December. 'So it is incumbent on us to set the terms and the debate so we have a shaped tax policy toward virtual worlds and virtual economies in a favorable way.'"
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Games: How Long Till Virtual Currency Taxation? 166 comments
GameDaily has a piece on the thorny issue of taxing virtual currency. From the article: "The current tax law has a clause, #525 to be exact, entitled 'Taxable and Nontaxable Income.' This verbose, meandering clause describes all manner of abstract (legal, illegal and otherwise) means by which you can earn income. Some of these obscurities can only be taxed by the speculative and vague term, 'fair market value.' ... This clause also includes a statement about goods acquired through barter or won (prizes or cash) in a game. Technically speaking this means those 'earnings' are taxable the very moment someone comes into possession of them, regardless as to whether or not they are sold for money. While no one knows the exact worth of all the virtual assets floating around the MMO gaming-verse, estimates for the sale of these goods range as high as $880 million a year. Step back and think about that for a minute... EIGHT HUNDRED AND EIGHTY MILLION! That's a crapload of real world money! Money made during what can be considered the infancy of the genre. Can you imagine how exponentially greater this amount will be in a few short years? "
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Games: Virtual Economies Attract Real-World Tax Attention 247 comments
doug141 writes to point out a Reuters story on the attention tax authorities are beginning to focus on virtual economies. From the article: "Users of online worlds such as Second Life and World of Warcraft transact millions of dollars worth of virtual goods and services every day... People who cash out of virtual economies by converting their assets into real-world currencies are required to report their incomes to the U.S. Internal Revenue Service or the tax authority where they live in the real world... '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 of the U.S. Congress."
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Your Rights Online: Taxing Virtual Gaming Assets 454 comments
rijit writes "It appears very likely that taxation of online games assets is inevitable. Quote: 'That's because game publishers may well in the not too distant future have to send the forms — which individuals receive when earning nonemployee income from companies or institutions — to virtual world players engaging in transactions for valuable items like Ultima Online castles, EverQuest weapons or Second Life currency, even when those players don't convert the assets into cash.' "
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Games: When Tax Day Comes to Azeroth 141 comments
1up is running a short piece originally from Games For Windows: The Official Magazine. It discusses the inevitability of taxation coming to virtual worlds, and a little bit about what that might mean in the indeterminate future: "Taxable income includes everything from tangibles like cookies to more ephemeral and subjective things like works of art, concert tickets, or advice. Those big, scary books that most sane people pay accountants to understand for them don't really narrow down what counts as taxable income so much as meticulously define it as damn near any piece of matter, energy, or information that should happen to pass into your possession over the course of the year. That goofy World of WarCraft gnome that GFW editor-in-chief Jeff Green's been leveling isn't any more intangible than, say, stocks."
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Live with it... (Score:3, Insightful)
Re:Live with it... (Score:5, Funny)
I think President Reagan said it best:
"Government's view of the economy could be summed up in a few short phrases: If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it."
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Translation: We don't want to get left out of this valuable market that needs taxation.
Doesn't look
Re:Live with it... (Score:4, Funny)
So that's why politicians are always voting themselves pay raises!
- RG>
Re:Live with it... (Score:5, Funny)
I take it a dead body rolling downhill would be taxed, regulated and subsidized and in some states allowed to vote.
Can I pay for virtual goods (Score:5, Insightful)
Or are they going to tax me for my hotel on Park Place too?
This is the kind of shit that Tories were shot for in 1776. Seems ripe enough time again.
Re:Live with it... (Score:5, Funny)
They're already in congress.
Why not do it yourself? (Score:4, Insightful)
Re:Why not do it yourself? (Score:5, Insightful)
Awesome (Score:5, Funny)
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But the have to reconginized charities. (Score:2)
Does the government REALLY understand what it's getting into? I don't think so.
What about theft? Or ganking? If it is taxable, does the loss of it redu
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Yes they do, it's the same business they've been in for many years.
"You've got money: Give it to me!"
Big deal (Score:5, Funny)
So (Score:2)
Seems silly and a waste of time. People do not use virtual gold on wow for real currencies though the spammers and pharmers seem to make money off it.
Until virtual currencies be
Re: (Score:2)
Its really really simple.... (Score:4, Insightful)
Re:Its really really simple.... (Score:4, Funny)
Good things like eulas geting ruled unfair may... (Score:2)
Second Life eula says that in g
Legislation on Virtual Goods Taxation.... (Score:2)
This is proof that income tax is a fraud (Score:5, Insightful)
So, not only is the IRS adamant about taxing "all income"
Basically, what is happening here is that someone is saying "I have 1,000,000 hippo bucks" and the IRS is trying to establish some metric of determining how much a "hippo buck" is worth in US dollars so they can tax it. OK, Slashdot: I'm offering those 1,000,000 hippo bucks for sale...who's going to buy them from me and establish the official conversion rate?
Oh wait, nobody because even a billion "hippo bucks" aren't worth anything. So then if I give someone 10,000 of my hippo bucks, has a transaction occured? Choose your own adventure:
Answer YES: Then guess f'ing what...every game of Monopoly is income and so, in aggregate, the population of the US probably owes trillions in unreported income to the IRS for all the games of Monopoly that have been played since its creation.
Answer NO: Then you're instantly smarter than our entire Congress and IRS because you realize that ITS A FREAKIN GAME. As soon as the game is dissolve, said "income" evaporates into thin air. That's the point. Sure, MMORPGs may run a lot longer than your typical game of Monopoly but guess what...if Sony went out of business and Everquest turned off its servers, then what would be left? Nothing but memories and bragging rights...which is all that's really left after a game of Monopoly.
Virtual taxes should be paid in virtual dollars. All the servers and the space the occupy, you know...reality, are already taxed at every possible level. Otherwise, what's to stop the IRS from taxing your score in Pac-Man? Couldn't that spot on the Hi-Score list have value and be auctioned on eBay? (L@@K YOUR INITIALS ON TOP!!! NO RESERVE!) Or how about those packets currently flowing into my computer...don't those have value? If someone idiot buys a single packet from me for $1000, then we are all screwed.
As a closing note, I'm uncomfortable with how easily my analogy about fictional money and invented wealth matches a description of the current US currency system. Hrm. Maybe the entire US banking system is already an MMORPG.
-JoeShmoe
.
Re:This is proof that income tax is a fraud (Score:5, Insightful)
According to the sites I just went to, 1000 gold is worth $60-100. So it does indeed have value.
The problem is not taxing someone's income, it's trying to tax it before it becomes income. If the person sells that gold on EBay (or otherwise for real USD), it -should- be taxed. If they merely hold it on their character and do nothing, there should be no tax. Oddly enough, the current tax laws -should- cover this already. If people aren't paying the tax, that's the government's fault for not cracking down on tax evasion.
Blizzard has a very real problem if the government starts to tax the virtual goods directly. That means that the characters, items, and gold on their servers have real value, and if they take that value from someone, or deprive them of access to it, they can be sued. That means that if someone cancels their account, they have to either continue to provide access to it, or pay them out. And if there's a data failure, they have to reimburse everyone. (Luckily, they could do so in WoW Gold, which they can make freely.)
Blizzard does have one ace up their sleeve for this fight, though. They have already made it clear that selling gold for real USD is against the TOS and is not allowed. This is quite clearly saying that it has no real value.
At any rate, the summary is deliberately starting a ruckus. They have said they are looking into it finally, not that they favor taxing it or any such thing. At -some- point they had to meet, even if only to say 'not taxable' and lay it to rest.
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O.k., lets take a deep breath. I don't like paying taxes either, but if you read the articles, you'll see that Miller is proposing taxing players who have accrued millions of real world dollars:
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The income in question isn't your virtual income, it's your real-worl
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Person A gives a $5 bill to Person B in e
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"whether it's called a sale or an exchange doesn't matter at all for the purpose of this discussion"
Yes, it does because a sale is income and therefore taxable and an exchange is not. You conveniently avoided this point throughout your entire response.
"Ye
What are they thinking? (Score:3, Insightful)
In real life taxes pay for...
1) roads
2) traffic control (stop signs, lights, etc...)
3) financial assistance (welfare, medicare, etc..)
4) law enforcement
5) military (protection of way of life)
6) etc...
I used to play WoW, so I'll use that as my example...
1) environment - developed and controlled by game maker
2) traffic control - disigned/mantained by your ISP
3) law enforcement - in game police, gamers paid by developer to help keep things under control - GM's
4) military protection - the particular guild your in, you pay them taxes via items found, helping noobs, etc...
Everything is covered and we pay either the ISP or the game maker (Blizzard in this case) and the government does not provide anything as far as I can tell. If they were to start collecting taxes what could they possibly offer that's not already covered?
Taxes: [wikipedia.org] Funds provided by taxation have been used by states and their functional equivalents throughout history to carry out many functions. Some of these include expenditures on war, the enforcement of law and public order, protection of property, economic infrastructure (roads, legal tender, enforcement of contracts, etc.), public works, social engineering, and the operation of government itself. Most modern governments also use taxes to fund welfare and public services. These services can include education systems, health care systems, pensions for the elderly, unemployment benefits, and public transportation. Energy, water and waste management systems are also common public utilities. Colonial and moderning states have also used cash taxes to draw or force reluctant subsistence producers into cash economies.
The above is all covered by the developer, if it even exists - again what could they possibly offer? It's not like they can re-write the game engine to add an educational system if doesn't already exist...
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bridges to nowhere: They are still physically in existence so we can use them if we wanted to turn around
How do they have time...? (Score:2)
Let's translate this BS-heavy synopsis (Score:3, Insightful)
Let's translate this damned thing into reality:
congress is set to re-visit taxing virtual goods, a concept they shelved a while back in order to consider the matter more fully.
Congress, as a whole, doesn't fucking care.
'Given growth rates of 10 to 15 percent a month, the question is when, not if, Congress and IRS start paying attention to these issues,'
I extrapolate exponential trends, showing my poor grasp of statistics. I also make baseless speculations sound important by name-dropping governmental agencies.
Miller, who is a fan of virtual worlds and economies, told CNET News.com in December. 'So it is incumbent on us to set the terms and the debate so we have a shaped tax policy toward virtual worlds and virtual economies in a favorable way.'"
Somebody with way too much time on his hands takes this shit way too seriously.
So let me get this straight.... (Score:2)
If I were an American, and a fictional story about me winning a hundred million dollars got published in a magazine, the IRS would expect to be able to actually tax me on those fictional winnings?
What goes on in these games is not real... it is fiction.
Are Linden Dollars lawful currency? (Score:2)
Also, are these earnings "overseas" earnings that might
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income is already taxed (Score:3, Insightful)
if i sell a virtual item for USD, that is income and it is already taxed.
stocks in a company are 'virtual' and existing in a 'computer simulation'.
non-physical items are nothing new.
the other interpretation is impossibly ludicrous which is to tax items created
and sold in-game with no real-world value. if thats the case then they must
collect the taxes in the form of in-world items.
The simple solution (Score:5, Insightful)
If I sell you an item in a game for $50, I would be required to declare that $50 as income for tax purposes.
If I give Linden Labs 100 L$ and get $50 back, I would be required to declare that $50 as income for tax purposes.
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Change some euros to usd back to euros and get taxed twice? No it doesn't work that way.
I pay monthly to secondlife, after awhile I have virtual linden money built u
Taxing "Virtual Goods"? I'm all for this. (Score:3, Funny)
Logistical Nightmare (Score:3, Insightful)
The other side to this, is that unless you deal with non IT managers and such you will probably never understand. It isn't that they are that greedy trying to come up with inventive ways of taxing you. Its that this kind of shit honestly makes sense to them. I spent 45 minutes the other day trying to explain why we couldn't make something happen, and I wasn't using technical stuff. I was drawing big multicolored circles to show that the two networks in question are not connected and the traffic cannot just go between them just because each network happened to have a computer in the same room as the other. They assume that all the computers are magically connected because they are networked. On top of this they frequently believe they are being lied to by IT because IT just doesn't want to do it, and not that IT is actually telling them it just can't work that way. There is absolutely no concept, nor any desire to learn even the fundamental workings of IT. Look at Sen "internet tubes" he wasn't being intentionally stupid...he really believes that insanity..and because anyone correcting him would be opposing his ideology on the subject he would just assume they are lying to him.
Oregon Trail (Score:3, Funny)
You have 14 oxen
Your water barrels are 12% full
You have 2.3 days of rations
You have $43
You have traveled 1349 miles
(H)unt (T)rade (G)o (P)ay Taxes
>G
It's Apr 16, 1837
You have 15 oxen
Your water barrels are 8% full
You have 1.3 days of rations
You have $43
You have traveled 1378 miles
There is a warrant out for your arrest for tax evasion.
(H)unt (T)rade (G)o (P)ay Taxes
>
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Synopsis though is that all citizens and legal residents would get a prebate for the taxes on poverty level spending. So your single mother, unless she's making a lo
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One small question arises from companies like Sony and SecondLife that sell virtual goods. Obviousy your monthly access fee would be taxed (recall that under FairTax, income is not taxed, only spending, so it's simply moving your tax due to your spending instead of income).
fairtax.org [fairtax.org]
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taxes should be a higher percentage if your p
Re:Flat/Fair tax (Score:5, Informative)
Remember, savings help the economy, too. Savings are reinvested in economic growth.
FairTax does target some individuals aggressively, sure. But so does our tax system now. Pardon me if I weep for a handful of wealthy people that don't pay any tax now that suddenly will have to pay taxes.
I'd probably pay more in FairTax than I would under Income Taxes, yet I still support FairTax. With FairTax, I can directly control my taxation through spending. Politicians will be unable to alter the taxation rate without it being highly visible. If the tax rate went from 23% to 24%, EVERYONE would see it on EVERY receipt. Right now they can hide tax increases in all sorts of places while simultaneously throwing money back as "tax refunds".
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The ones that are as wealthy as they are because of what seems like a mental disorder. I know a multi-millionaire who strongly refused to purchase non-generic ketchup at the grocery store because it woul