You won't believe this:govt official proposes tax on SecondLife, World Of Warcraft, etc. winnings

When I first readmy colleague Daniel Terdiman's article "IRS taxation of online game virtual assets inevitable" early this morning, my first reaction was "what the..."

Dan's positioning of this as a very real public policy came from a Saturday panel called "Tax and Finance" at the New York Law School's State of Play/Terra Nova symposium. 

And it was not an academic who raised the possibility of taxing stuff like EverQuest weapons, SecondLife currency, or Ultima Online (as shown above) castles. It was a senior economist who works for the U.S. Congress.  

"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," said Dan Miller, a senior economist with the Congress' Joint Economic Committee. "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." 

Daniel says that Miller is a "fan of virtual worlds." Based on that info, this doesn't seem to be a matter of a Luddite government bureaucrat talking. But then again, Miller's definition of "favorable" might not match yours, or mine. 

And if you are wondering how this idea took root, it originally was proposed by author Julian Dibbel in his book "Play Money," as well as in an article he wrote in Legal Affairs magazine.

"If you haven't misspent hours battling an Arctic Ogre Lord near an Ice Dungeon or been equally profligate spending time reading the published works of the Internal Revenue Service," Daniel quote Dibbell's article, "you probably haven't wondered whether the United States government will someday tax your virtual winnings from games played over the Internet. The real question is: Why hasn't it happened already?"

Well, maybe the "reason it hasn't happened already" is that it is a dumb idea. Even in those real cases where Second Life assets extend into the real world of carbon-based sensient beings and financial instruments created for this real world, I don't see how they could possibly be taxable.

Tax Ultima Online castles? Hell, our real-world property taxes are too high. 

Arctic Ogre Lords? I'm more afraid of real world overlords. Especially those in Washington, D.C.

But maybe you do? 

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