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Lawmakers Trying to Head Off Massive Taxation
Posted by
Zonk
on Thu Oct 19, 2006 12:36 PM
from the that's-massive-games-not-lots-of-taxes dept.
from the that's-massive-games-not-lots-of-taxes dept.
An anonymous reader writes to mention a Reuters article about a lawmaker's attempt to stop the Government's interest in taxing Massively Multiplayer Game content. R-New Jersey Jim Saxton is cautioning against exploring the taxable status of in-game items. From the article: "'The goal of the forthcoming Joint Economic Committee study is to help lawmakers understand the issues involved and head off any premature attempt to impose a tax on virtual economies,' he said. Under current law, Saxton said if a transaction takes place solely within a virtual world there is no 'taxable event.' Dan Miller, chief economist for the Joint Economic Committee, said earlier this week that the committee's study would start with a blank slate and be completed by the end of the year."
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Virtual Economies Attract Real-World Tax Attention 247 comments
doug141 writes to point out a Reuters story on the attention tax authorities are beginning to focus on virtual economies. From the article: "Users of online worlds such as Second Life and World of Warcraft transact millions of dollars worth of virtual goods and services every day... People who cash out of virtual economies by converting their assets into real-world currencies are required to report their incomes to the U.S. Internal Revenue Service or the tax authority where they live in the real world... 'Right now we're at the preliminary stages of looking at the issue and what kind of public policy questions virtual economies raise — taxes, barter exchanges, property and wealth,' said Dan Miller, senior economist for the Joint Economic Committee of the U.S. Congress."
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The Tax Man Comes To Virtual Australia 91 comments
shadrach_au writes to mention that what was being considered in the states is now apparently policy down under: your virtual assets can be taxed. The Australian Tax Office (ATO) is warning citizens to consider whether their gaming 'is a hobby or a business' and act accordingly. From the article: "If a virtual transaction has real world implications — if it can be attributed a monetary value — it attracts the attention of the Tax Office. Sites such as slexchange.com set rates for swapping Second Life's Linden dollars for 'real' money. 'The real world value of a transaction may form part of your taxable income, even if it is in Linden dollars,' the ATO spokeswoman says. 'In addition, there may be GST (goods and services tax) to consider.' In other words, if you are turning over the equivalent of more than $50,000 selling virtual jewelery to Second Life avatars, you must get an ABN (Australian Business Number) and register for GST."
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Never going to happen. (Score:3)
If the government can't get it's collective head out of it's ass to setup/allow for inter-state/inter-country taxation of goods & services; how do they EVER expect to tax imaginary items!
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So does this mean... (Score:4, Insightful)
That I have to declare income taxes on all cash received while playing PayDay(r)
That I have to declare my tax status to the IRS when I finish the game of Life(r) and retire?
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That if I get a monopoly in Monopoly(r) that my future games have to be government regulated?
If you sold one of your monopolies (or any other asset) in game to another player for game money, the IRS couldn't care in the least. If you were to accept re
so, does this mean I can deduct (Score:4, Interesting)
Actually, yes, you can deduct them (Score:2, Interesting)
Making money by monetizing game assets is no different than making a profit by buying and reselling items o
A new take on an old saying (Score:2)
Unenforcable (Score:2)
real world tranactions for access only (Score:2)
You already do this when you purchase Microsoft Products. You don't buy anything but rights to access the code under specific conditions.
The only thing needed to track is
Ridiculous (Score:4, Interesting)
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I believe they are saying that while the items in the game don't have value, your time spent acquiring them
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It's like taxing for sex (Score:3, Interesting)
Revolution (Score:3, Insightful)
KOL (Score:2)
Simple Solution! (Score:3, Insightful)
Might be a problem with inflation if those IRS agents decide to buy mounts.
Neopoints (Score:2)
How the heck would the government spend a few Neopoints from Neopets?
Mayb
The tax is fair (Score:4, Funny)
I want a percentage of the Money in the (Score:2)
WTF kind of artform have we created?
An official opinion, on the other hand... (Score:2)
On the other hand, reporter Julian Dibbell wrote an article on whether gamers should pay real-world taxes on virtual treasures [legalaffairs.org] and got a
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Collateral - perhaps (Score:3, Insightful)
I decide to expand. I could expand slowly, hiring one talented game-player then,
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Could you imgaine having to pay sales tax on Baldic Ave or income tax on park place everytime you play monopoly? Does it make a difference if it is a computer version? How about i
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The winning card for a mcdonalds monopoly game that only gives a free bigmac or supersizes any value meal free is worth the price of a big mac value meal upgrade. Does it then count as income because someoen gave you the equivil
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A slight clarification:
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There are significant
Re:No value? (Score:4, Informative)
Oh, and before anyone laughs their way to the bank, the kicker is that anything above 100 million is taxed at 100%. All of it. Bill Gates dies, he can't leave more than 100 million dollars worth of assets to any one person. Bill can't take it with him, and nobody who complains about inheriting *only* 100 million dollars can possibly be taken seriously. Here's a giant leg up over everybody else - if you want more you have to earn it.
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Perhaps the one reason most of humanity is in the con
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They aren't "double-dipped" they are taxed as they mo
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Re:No value? (Score:5, Informative)
Huh? If you take your money and use it to fire your funeral pyre, nobody will be taxed. If you transfer it to somebody as an inheritance, then that person is taxed -- not you. You're dead, so you can't pay taxes.
Now, with respct to family farms, lets go over this one last time; the fact is very, very few people inheriting farms or even family businesses pay the estate tax.
Figures from the IRS in 2004 show that in that year, across the entire United States, there were only 440 estates where the majority of the value was in a family farm or business. This was 2% of all estates taxed in 2004. There were a total of around seven thousand estates that had some business or farm component, except for the 440 mentioned above, all these estates were made up of a majority of liquid assets. Presumaby in in the 95% of the cases where business/farm estates consist of a majority non-business assets, the inheritor can keep the business by liquidating some of those assets.
But what about those 440 estates? How many small familiy farmers in this were put out of business? Probably none or very few.
Of those 440 estates, the vast majoirty (the 350 valued at $1.5M to $2M) paid a rate of 1.6%. I'm leaving out estates of less than $1.5M because they pay 0%. So if you were a family farmer or small business owner who inherited a $2M estate, you'd have to come up with $32K. Assuming you came to this with no liquid assets of your own, and received no cash equivalents in your inheritance, that's a lot of money. However even in this worst case, it wouldn't be difficult ot raise $32K with $2M of collateral, if you have a half way viable business.
Republicans like to argue as if everybody paid the top rate of 47%. How many farm or business estates paid this rate in 2004?
None.
The highest rate paid on any business or farm estate in 2004 was 22.2%; this was paid by a grant total of 30 estates in the entire country, each of which was valued at over $20M.
It is possible that some of these 30 inheritors had to sell the family business. However as these would net over fifteen million from the sale, they are not exactly starving.
Now, those figures are two years old. What about family farmers today? Well, as of 2005, the exemption is $2M. And if you are a farmer, you get to exclude the value of your land and equipment before you start counting towards your $2M exemption.
By the way, notice how assiduous congress is in raising the exemption for estates from $1.5M to $2M, and how it contrasts with the lack of inflation indexing on the alternative minimum tax, which more and more middle class people pay. Adjusted for inflation the $100,000 benchmark used in 1970 would now be more than 5x as much in current dollars. The people at the lower end of the AMT range don't have anything like the tax shelters that people making over half a million do.
So, this year we can expect only 200 or so farms to come under the estate tax, and that will only apply to cash, not the farm or equipment, and only cash over $2M.
Now you can argue the estate tax is bad policy. You can even argue that the estate tax is morally wrong. However, you can't argue that the estate tax is bad policy or morally wrong because it puts small farmers and businessmen out on the street.
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If you (in the process of violating the terms of service) sell virtual items on eBay, it's income, and you're obligated by law to report it on your filings at the end of the year.
This is hoopla about taxing in-game currency. Basically, ever
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They do tax stock options as a capital gain though, even though no hard currency or goods have changed hands.
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You imply that virtual goods do not. If they don't, obviously they can't be taxed, but the implication is that you can easily determine these items m
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"If you steal property, you must report its fair market value in your income in the year you steal it unless in the same year, you return it to its rightful owner"
Pulled from http://www.legalaffairs.org/issues/J [legalaffairs.org]
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That you choose not to do it for profit doesn't mean it can't be profitable.
Re:Let's "have a chat" with these guys next electi (Score:2, Interesting)
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Do I get to count losses (due to player theft or otherwise) against my taxes owed as well?
Only to the extent of income, and only as an itemized deduction.