Monday, October 16, 2006

An Interesting Economics Question!

I mention often that I am a student at UTSA, but I am also taking a Micro-economics class online at San Antonio College. I bring this up because my professor posted a discussion question based on an article in the Washington Post online, entitled "Virtual economies attract real-world tax attention."

His question was, "Should we tax people who play World of Warcraft and Second Life?" Below is my response. I don't know how my colleagues feel about this issue so I wanted to pose the question you. Let me know what you think about this matter by posting a comment!!

While I do not understand the draw to virtual sites like World of Warcraft and Second Life, I do know that they are very popular in many sectors of the business world. I am aware that virtual societies such as Second Life have been discussed at great length in PR circles lately.

As for whether I feel that virtual economies should be taxed, I have two thoughts on that matter. The first being, if a person's wealth aquisition remains virtual and there is no taxation system in place within the virtual society, then no, that person should not be taxed on their virtual wealth. The key word being virtual. On the other hand, if an individual has amassed enough virtual wealth, and the opportunity is there for it to be converted into U.S. dollars or any other currency for that matter in other countries, then yes there should be taxation on the virtual wealth at the time it is converted. With this being said, the taxation should be in accordance with the tax laws of the country of which the virtual dollars are being converted into that country's currency.

Does this make sense????


Kami Huyse, APR said...

As long as you haven't converted from the Second Life currency, which is Linden's, you don't have to pay a tax. Well, beyond the $9.95 the Second Lide game has you pay to be a fully participating "citizen" in their game.

However, if you convert Lindens to dollars, or whatever the currency of your country of origin, it doesn't matter that it was made on the Internet. In the US you have to claim it as income, and fill out a 1099. That's the law.

Anonymous said...

Hi, my name is Esti and I work for Brian Solis at FutureWorks, I was wondering what your email address was? I believe we have some links that need to be updated on this site. My contact is, please email me when you have a spare moment.

Thanks so much!