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.'"
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 like much has changed since Reagan was around.
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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)
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Stop taxing income. It's that simple. Charge a 20% VAT for everything sold in the USA and make sellers responsible for collecting taxes. The VAT would not apply to the first $20k spent and would not apply to items that I bought and re-sold.
Maybe that would finally stop the practice of rich fuckers not paying income taxes. It's pretty hard to loophole a 20% tax on a new yacht.
Loopholes (Score:2)
I think you explained why your idea wouldn't work. What if everything I buy over $20k I resell to my cousin and he lets me use it?
For any tax system to work it should be flat, no exceptions. Let's say my church buys an SUV to bring the children to sunday school. Tax exempt of course, could you imagine any more noble use for an SUV? OK, but who will be responsible for checking if the reverend isn't using t
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Except you seem to forget that his cousin would still have to pay 20%. Once way or the other, someone is paying that 20%. It doesn't matter if it's the original purchaser or the second. The second simply acquired the tax liability. In other words, the cousin more than likely wouldn't purcahse it because it doesn't help and even if he did, the tax is still paid. Not to mentio
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The first $20k of expenses for all families would be exempt from the VAT. Everything else would be taxed at 20%.
If, in any given year, I bought $21k worth of goods, I would pay $1000 * 20% tax.
If you bought $2,000,000 worth of goods, you would pay $1,980,000 * 20% tax.
If I bought a TV and then re-sold it, neither the buyer or seller would have to track the tax. The tax on the TV would have already have been paid at first sale.
Obviously, if you run, for example, an e-bay bus
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Look, when did the Slashdot tradition become to use retarded AOL-speak words instead of proper ones? It's called the 'internet', please at least use the proper word when you're trying to make a serious point.
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 reduce your taxes?
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Sounds like you are indirectly making the argument that the people purchasing the gold should be charged with receiving stolen goods.
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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 become worth accepting on the financial market then its a waste of time.
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Virtual goods should be treated just like stock, or any other valuable non-currency good that you might invest in.
When you're just holding on to it, and not doing anything with it, there's no tax. But when you go to sell it, then you are responsible for paying tax on that income. (In order to avoid paying tax on the entire amount raised by the sale, you can go back and establish the original price you paid for the good, and only pay tax on the money you made -- this is simple
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s/valuable non-currency good/pyramid scheme/g
Virtual goods are non-scarce items without any inherent value. As such they are not comparable with stocks, but rather with monopoly money or pyramid investments.
Otherwise I'd say you're perfectly right. Just because it's small enough not to be noticed and hard enough to trace that the IRS might not care doesnt mean it isnt income and taxable. I dont see why there would be a need for any specific
Its really really simple.... (Score:4, Insightful)
Re:Its really really simple.... (Score:4, Funny)
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The problem is that 100g has real value when sold (Score:2)
(If this strikes you as unlikely, replace it with them taxing gold-for-dollars transactions, as they already theoretically do. All they need is a way to actually discover that the transactions are taking place, in the same way t
Good things like eulas geting ruled unfair may... (Score:2)
Second Life eula says that in game things do have cash value so they may be in for some big time IRS work load also they may also have to crack down in game Casinos and other things that may not be lawful in some states / areas.
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
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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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I'm unaware of any taxes that apply to money changing. I'm sure there's service fees and what-not, but (I hope) that there's no tax that is collected just for changing dollars into pesos, poun
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If I work for room and board, instead of money, that's still income. The money just went directly towards room and board instead.
If I play WoW and earn 1000 gold, then sell it for $100, that's $100 worth of income. If I don't see it, it's still worth the same $100, even if I don't do the currency conversion.
If instead, you treat WoW gold as an object (the way real gold is treated, e
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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-world income that comes as a consequence of that virtual income. Unlike Monopoly money, you can sell your virtual currency for real money... that means that it has a real-world value. Even if you don't plan on selling your currency, it still has value because
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Person A gives a $5 bill to Person B in exchange for five $1 bills. Who has profitted? Nobody...it's a "like kind exchange" and obvious to anyone older than five. And yet, the IRS wants to be the sole agent for determining what is a "like kind exchange". Trading a large swamp for a small fore
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How the hell do you "sell" currency? The only entity that can do that is the Federal Reserve, selling notes that cost five or ten cents to make for face value. For everything else in the US, it's just an exchange.
Hooray for pedantry. The exchange of virtual-world currency for real-world currency is frequently called a "sale" because the virtual-world currency is treated as a good rather than as currency. Dwelling on this fact is inconsequential, because whether it's called a sale or an exchange doesn't matter at all for the purpose of this discussion.
Person A gives a $5 bill to Person B in exchange for five $1 bills. Who has profitted? Nobody...it's a "like kind exchange" and obvious to anyone older than five. And yet, the IRS wants to be the sole agent for determining what is a "like kind exchange". Trading a large swamp for a small forest of equal "value"? Exchange. Trading a male cow for a female cow? Taxable. I pay $250/mo for my own medical insurance and my employer pays me $250/mo to reimburse me. Is that taxable income or a tax-free exchange? In order to know, I would have to slog through something like this:
http://www.irs.gov/irb/2005-16_IRB/ar08.html [irs.gov]
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 yours
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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.
"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 ta
Compare it to stocks... (Score:2)
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A "hippo share" would be a share of something purely imagined and intangible. There may be a demand for them, people may even be willing to pay ri
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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 or something, or take pictures or something just as pointless - or even bitch about wasting money
Again - what could they provide in a virtual word created by someone else, even if it was just something to bitch about? Are they going to start creating l
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. And somehow the IRS figures its not only entitled to a portion of what you actually make, but also a portion of what you might have _imagined_ yourself making?
Uhmm... wow. Just wow.
Are Linden Dollars lawful currency? (Score:2)
Also, are these earnings "overseas" earnings that might avoid taxation. After all, show me just where in the USA my SL property is located.
Most of all, will Linden Research turn over records to the IRS that they would need in order to track users down. And can you hide yourself through foreign proxies? Af
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Is the Euro even a lawful currency? Not in the USA, nobody is required to accept it in payment. However it's easily converted to US dollars, and if you have income in Euro
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.
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What's absurd, however, is to tax items that are, when all is said and done, fictional. Regardless of whether these items are worth any real money to anyone or not. You may as well put a person in a higher tax bracket just because he _imagines_ winning the lottery.
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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 up, I cash it out, and I'm taxed AGAIN? Nonsense.
We pay way too much in taxes, and all this talk about how to get MORE/NEW taxes is absurd. How about some financial responsibility and a balanced budget before those fuckers in washington try to take anymore
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When LL gets money from you, they are taking a profit. When you get money from them, you are effectively taking a profit (maybe keep records of what you put in, and show that you made no profit?)
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However, it's still not that simple. If I have to claim the $50 in gamebux that I made farming gold, or whatever, does that mean I can deduct the cost of the following:
The game
The subscription (to WOW or whatever)
The internet connection
The PC used to access the internet
In other businesses, those might be viable expenses dependi
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Tax anytime real world money is exchanged for virtual goods.
If I sell you an item in a game for $50, I would be required to declare that $50 as income for tax purposes.
This is already the case. It is income. It must be declared.
If I give Linden Labs 100 L$ and get $50 back, I would be required to declare that $50 as income for tax purposes.
Possibly. (do you mean US$? 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
Taxing "Virtual Goods"? I'm all for this. (Score:3, Funny)
No taxation without representations (Score:2, Interesting)
- RG>
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(I meant to reply with this:)
Maybe in your country they can't vote.
Up here in Canada, that was ruled unconstitutional a few years ago.
- RG>
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.
This just in, baseball fans... (Score:2)
You will now be charged for each run your hometown team scores. Cities with two teams may select which team they prefer the next time they file their 1040.
(Exception: Residents of Chicago choosing the White Sox will be arrested for tax evasion.)
Holy Cow and a half. (Score:2)
I wonder if that 100M isk in Liquor I bought in Amarr space, only to find out its contraband there is tax deductable?
Lets see, I think I can sell Senator Hillary some shares in my corp for
Define virtual goods. (Score:2)
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Seriously. What is a virtual good? A poem? A news article from Reuters? A short fiction story?
Not even. All of the above items have a real-world value: you buy books of short stories and poetry, and you likewise buy newspapers that run Reuters stories. The newspapers, in turn, pay Reuters for the right to run the stories in the first place.
A "virtual good," as best I understand it, is something that has no real-world counterpart. If I view a poem online, I can print it and have a real poem. If my
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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On a real world note, if they are taking advantage of public resources or institutions to make a real-world profit, they should be required to pay towards the upkeep of those resources or institutions. I
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I mean, we can have a discussion of whether people selling stolen credit card numbers on IRC should pay taxes on their inc
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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 lot more than poverty level, wouldn't be paying more in taxes. Her kids would count in the prebate amounts.
As for making money from investments, sure, that wouldn't be taxed, but neither is income, so it doesn't really matter. The rich guys will pay their
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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 lot more than poverty level, wouldn't be paying more in taxes. Her kids would count in the prebate amounts.
O
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The bitch of it all is figuring out taxable income, exemptions, etc. The rules are written like a Microsoft EULA.
Regardless, despite paying a lower %, the poorer tax brackets are still biting more: 15% of 35,000 leaves you with a lot less actual money, regardless of the percent you get to keep.
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Sure, if we just have a national income tax of, let's say 10% just to make the math easier, then the people who make $1,000/year pay $100, and the people who make $10,000 pay $1,000. So, the richer pay more, the poorer pay less, but everyone's paying a fair share in accordance to their earnings.
So, yeah, it's a great concept. But A) Congress will never do it because some loopholes are nice in their minds, and B) IANAAccounta
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To a person or family only making $20k a year, that 10%($2000) is a very large chunk of money and desperately needed to buy food. To a person or family making $200k a year the 10%($20000) is still a large chunk of cash but isn't needed as badly for buying food.
Same thing applies to sales tax, which is effectively a flat-tax.
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Removing the brackets does not meaningfully simplify the tax system. The brackets are simple, easy to understand, and everyone can sense their progressive/regressive effect.
What has always been hard about income tax, is defining 'income'. And it is within that definition that all the exceptions and loopholes are inserted. A flat tax would not help in this
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Luckily, FairTax would abolish the idea of taxing virtual economies altogether, at least from what I've read and understand. Only services and first-hand goods are taxed, used items are not. Since you never purchased the virtual items to begin with, there is nothing to tax.
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]
I don't like fair tax. A 40% tax when you're making $20k can be the difference between having enough money to rent and not being able to afford it. A 40% tax at $200k means you might not be able to afford that nice lakehouse and boat on which you will sip fine alcoholic beverages. Because the economy isn't fair, and encourages you to exploit anything and everything to the detriment of everyone else, and because you benefit more from a stables society when you're making $200k/year than when you're only maki
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taxes should be a higher percentage if your pay is higher. Not enough to remove the incentive to move up in income, but enough so that the tax reflects the benefit you gain from a secure country.
Why should it be, other than liberal/socialist ideas of fairness? I happen to believe that we shouldn't l
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It is happening right now in the united states and the easiest way to prevent it is to prevent overconcentration of wealth in too small a part of the population.
There is a great benefit to allowing accumulation of reasonable wealth.
In today's society, 10mil or even 100mil perhaps.
There is no benefit to society in 1% of the population controlling 95% of the assets.
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Remember, income taxes for businesses are only considered another expense; they simply raise their rates to cover.
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1.) People making ends meet do not have enough money to end up investing. Especially where I live in southern California that has an astronomical high cost of living.
2.) A high sales tax hurts the economy and that trickles back to your employer cutting costs by eliminating your job or slashing your wages.
So if you make 45k a year and take home 30k then you should get 45k home right? Wrong. Your employer then will just pay you 30k so they can lower their costs to make u
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Depends on where you live, and what lifestyle you choose. Should I not be rewarded for working harder or investing intelligently, beyond some arbitrary limit?
Who defines a person's use to society? Capitalism doesn't judge a person in terms of society which is something very difficult to define, it only addresses relative value - between the service and
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 would have cost $0.06 more. It's strange, but this type of person gathers so much money and refuses to spend much more than the minimum necessary to survive, and does not even enjoy the money he or she saved. I'm no millionaire myself, but I honestly thought
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This person obviously has a lot of money saved, and it's helping the people who get to loan that money. Even if this millionaire's fortune is in dollar bills inside his mattress it will be doing good, because that will let the government print more money without ill effects.
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And that is at 9%, imagine taking that up to 24% or higher like your suggesting, and nobody would buy anything. People would go back to making things themselves because it would cost so much to purcha
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For every dollar a rich man has he spends about $.15 and for every dollar a person under minimum wage spends $1 and more under credit because he/she is always broke.
So a sales tax hurts the poor because a %30 tax on cigarettes is an hours wage for one man yet about 15 seconds of wage for another.
The middle class and poor outnumber the rich so in essence the rich lose customers to their business
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They'll tax something illegal if they want to.
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