Authorities seek to tax online worlds

Yahoo News

Users of online worlds such as Second Life and World of
Warcraft transact millions of dollars worth of virtual goods and services every
day, and these virtual economies are beginning to draw the attention of
real-world authorities.
"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.
"You could argue that
to a certain degree the law has fallen (behind) because you can have a virtual
asset and virtual capital gains, but there's no mechanism by which you're taxed
on this stuff," he told Reuters in a telephone interview.

So if you have virtual capital gains, do you have to pay virtual taxes? Will virtual tax dollars go towards the development of virtual infrastructure and virtual social services?

All snarkiness aside, what brings this issue to a boil is how virtual wealth is transformed into actual wealth:

Second Life, for example, was specifically designed by San
Francisco-based Linden Lab to have a free-flowing market economy. Its internal
currency, the Linden dollar, can be converted into U.S. dollars through an open
currency exchange, making it effectively "real" money.

It's a Well-Known-Fact that enterprising individuals are selling Runescape players virtual currency in exchange for real currency. A quick googling of "runescape gold farmers" uncovers an industry in which people generate virtual revenue in-game and sell it (on Ebay and elsewhere) for real cash. I assume the same virtual-capital generating enterprises exist for World of Warcraft, the Sims, etc but I can't be bothered to google it.

Virtual economies are even garnering semi-academic attention. Exhibit A is this essay by a University of Florida undergraduate on the in-game and out-of-game economics of World of Warcraft.

I find all this trippy as hell, and the trippiness is compounded by advertising that sells Get-Rich-Quick-Guides to becoming a "virtual billionaire." I understand the market for financial well-being and self-improvement books and courses that focus on the real world. I can dig why someone would pay twenty bucks for a book by Suze Orman or T Harv Ekar to improve their real financial situation. But the idea that someone would pay money to improve their financial situation in a fantasy role-playing game blows my mind.

Reading down to the bottom of the Yahoo article, I'm not sure which factoid is more surreal: that a policy paper is being drafted on how tax leigislation should deal with virtual wealth, or that Reuters is opening a virtual Second Life bureau to report on "virtual news."

"Virtual News?" I need to go have a lie-down.

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