World Library  
Flag as Inappropriate
Email this Article

Virtual tax

Article Id: WHEBN0008427709
Reproduction Date:

Title: Virtual tax  
Author: World Heritage Encyclopedia
Language: English
Subject: Multiplayer online games, Social interaction in MMORPGs, Dragon kill points, Blitzkrieg 3, Massively multiplayer online real-time strategy game
Collection: Taxation
Publisher: World Heritage Encyclopedia
Publication
Date:
 

Virtual tax

Virtual tax is a proposed tax on internet gamers for items bought or traded solely within the virtual world (Internet game worlds).[1][2][3] The tax on a transaction would be considered as if it were a purchase or sale (if real currency is involved) or barter (if not). Virtual property, on the death of the owner, would be considered as if it were any other intangible property for the purpose of estate or inheritance tax. The Joint Economic Committee of the U.S. Congress has investigated taxing such transactions.[4] This tax might include items bought with virtual currency, virtual items traded for other virtual items, real items traded for virtual items, and real currency traded for virtual items.

Contents

  • Examples 1
  • Recent restrictions and changes 2
  • See also 3
  • References 4
  • Further reading 5

Examples

The online game Maple Story, which displays the rate of in-game currency collected whenever a trade is conducted successfully between two players.

Many online games, like Maple Story, have implemented a tax system to curb the inflation rate of in-game items.[5] The tax is collected whenever a trade is conducted between two players. A small percentage of in-game money paid by the buyer is collected as tax before reaching the hands of the seller. The game developer claims that by taking out a small amount of game money in each trade, it will curb the inflation.

However, many users stated that this is the biggest push factor to inflate, as the sellers now demand higher prices before selling an item (in order to make up for the loss of in-game money through tax system). Also, some users state that the inflation will eventually stop without the interference of the game developer. They claim that as more players achieve high levels, they would be able to hunt more monsters and deliver more equipment. Like the real world, the economy of online games are based on supply and demand. When more items are released into the market, it pushes the supply up, resulting in cheaper goods.

Recent restrictions and changes

eBay, in order to protect virtual property and avoid legal action against them, has banned all sales from virtual sites. The only exception to the ban is Second Life which in the eyes of many, including eBay representatives, is not a game. Many of the major virtual world (e.g. EverQuest II) providers have also started their own virtual trading shops. Players will be able to trade virtual items with other players for real cash, and the providers will receive a small tax charged on every transaction.

The government has also stated that they want to start taxing online game transactions; however, charging these new taxes will require new equipment.[6]

See also

References

  1. ^ Does the IRS really want your World of Warcraft gold?, by Julia Layton, howstuffworks.com
  2. ^ Are virtual assets taxable?, by Daniel Terdiman, January 17, 2006, CNET News.com
  3. ^ Virtual Taxes: The Next Frontier in Virtual Property Rights in On-Line Gaming?, December 6, 2004, TaxProf Blog
  4. ^ US Congress launches probe into virtual economies, October 15, 2006, Adam Reuters, Reuters
  5. ^ Maple Story Notice: Tax System, February 9, 2006
  6. ^ "Why is eBay banning the sale of online-game virtual assets?".  , by Julia Layton, How Stuff Works, February 3, 2007

Further reading

  • Congress set to issue virtual taxation report in August
  • CIoT opens up shop in Second Life
This article was sourced from Creative Commons Attribution-ShareAlike License; additional terms may apply. World Heritage Encyclopedia content is assembled from numerous content providers, Open Access Publishing, and in compliance with The Fair Access to Science and Technology Research Act (FASTR), Wikimedia Foundation, Inc., Public Library of Science, The Encyclopedia of Life, Open Book Publishers (OBP), PubMed, U.S. National Library of Medicine, National Center for Biotechnology Information, U.S. National Library of Medicine, National Institutes of Health (NIH), U.S. Department of Health & Human Services, and USA.gov, which sources content from all federal, state, local, tribal, and territorial government publication portals (.gov, .mil, .edu). Funding for USA.gov and content contributors is made possible from the U.S. Congress, E-Government Act of 2002.
 
Crowd sourced content that is contributed to World Heritage Encyclopedia is peer reviewed and edited by our editorial staff to ensure quality scholarly research articles.
 
By using this site, you agree to the Terms of Use and Privacy Policy. World Heritage Encyclopedia™ is a registered trademark of the World Public Library Association, a non-profit organization.
 


Copyright © World Library Foundation. All rights reserved. eBooks from Project Gutenberg are sponsored by the World Library Foundation,
a 501c(4) Member's Support Non-Profit Organization, and is NOT affiliated with any governmental agency or department.