Congress to Revisit Virtual Goods Taxation 205
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.'"
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".
Re:Flat/Fair tax (Score:3, Informative)
RON PAUL WE NEED YOU TO TAKE THIS ISSUE (Score:0, Informative)
this is your golden sound bite moment!!!
you were awesome on daily show -- do the show again with this topic!!! please
Re:The simple solution (Score:2, Informative)
If I sell you an item in a game for $50, I would be required to declare that $50 as income for tax purposes.
This is already the case. It is income. It must be declared.
Possibly. (do you mean US$? if L$ no income has actually been made... unless they are collecting in-world)
Hobby Expenses may be used to offset Hobby Income, so for the casual gamer (or, Second Lifer, rather) as long as you get back less than you put into it, there is no gain. But hobby still must be reported. You simply report the hobby expenses as well.
And I don't think they are really referring to WoW type items, are they? TFA did not say, but some of the "related" articles (which I did not read) may have. If so, then the need to collect it in WoW gold, or whatever the in game currency would be if the currency is declared by the publisher to have no value.
Re:This is proof that income tax is a fraud (Score:3, Informative)
"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.
"Yes, the law is complicated. Otherwise, there would be loopholes that would make the ones that exist look tiny by comparison. Deal with it: either figure it out yourself or hire more adept than yourself to do it for you."
Considering I've had two different tax professionals give me two opposite answers for the above question, it's more than complicated: it's contradictory. It should be plainly obvious that reimbursing someone for an expense is the same as my directly paying the expense yourself but...duh duh duh...it's not. Someone else pointed out the absurd example of giving $100 back and forth and paying taxes on "windfall" income until nothing remains of the original $100. Is there a single line anywhere in the tax code that says that isn't what actually the IRS thinks should actually happen?
"If the other player pays you $5 for your Monopoly money, that's income, and theoretically should be reported to the IRS. Of course, it's only $5, so no one cares. However, if you were paid $5,000 for that Monopoly money, you would unquestionably need to report it as income. Similarly, if you sell a WoW account on eBay for $5,000, that's income that you need to report."
As I mentioned earlier, you are completely skipping over the difference between sale and exchange. If someone gives me $5000 for a piece of land, and I take that $5000 and buy another piece of land, then it's not income, it's an exchange (called a 1031 exchange I believe), therefore there's no tax. If the person I paid the $5000 to also buy land, then neither one of us owes any taxes at all.
So if I buy 500 WoW gold for $500, and then sell those 500 WoW gold for $500...isn't that an identical situation? Beause the dialog seems to be that the person who I bought the gold from would be paying taxes on the $500, and then I'd be paying taxes again on the same 500 Wow gold when I resold it. People wouldn't accept that kind of "double-dipping" taxation of real estate, so why should we accept it on virtual real estate?
"Ah, the whining of a tax protester."
There's no such thing as a tax protester, unless this mythical being doesn't pay for gas, own property, or buy anything really at all. I have no problem with the $5-6 extra I pay on a meal that covers the infrastructure to get me there. I pay some pretty outrageous property taxes, but I do enjoy having a fire department. And I think it's perfectly legitimate to ask what good or service has been provided for the government in exchange for income tax. Or how someone who can't afford his living expenses and ends the year with a net value less than $0 still has "income". It's absurd. And before you point out that maybe he spent all his money foolishly on things like jet skis, let me remind you that he's already paying taxes on that. It's double-dipping and it's taking advantage of the fact that most people don't have the resources to carve out a loophole for themselves. Businesses can sell the same widgit to each other 1000 times and not pay a dime in tax because they are only "resellers" or "wholesalers". But the customer pays a tax when he buys the widgit, and then gets taxed again when he resells it at his garage sale. That person also gets taxed when they resell it at their garage sale.
I realize that the thinks this is A-OK, because any interpretation or confusion that puts money in their pocket is great idea in their book. But that doesn't make it right, morally or ethically, and it completely fails the logic test. If you want to call me a "tax protester" because I think the rules for taxation should be directly tied to the benefits they fund or that the rules should be consistant with an eye towards avoiding any chance of double-dipping...then fine, I'm a "tax protester" and you