Musings from Brian J. Noggle: Coming Next: A Tax on Monopoly Transactions

Coming Next: A Tax on Monopoly Transactions

Virtual economies attract real-world tax attention:

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.

Forget what you learned about how laws are made on Schoolhouse Rock; here's how they're really made:

Some crackpotesque person or thoughtful person presents a whacked-out taxation proposal, just for discussion.
A loud cacophony of jeering greets the proposal, and it's tabled.
A slightly less crackpot person brings it up again, perhaps in a time of fiscal crisis.
A smaller number of jeers greets the second person, and the proposal is tabled.
An almost rational person brings up the proposal again, possibly with a cool acronym and certainly some promise for funding education with the proceeds.
The mass of jeering crowd is silent, for it has already expressed its displeasure.
Legislators take the relative silence as assent and bring the bill up.
Suddenly startled citizens react negatively, firmly, and resolutely.
Legislators table the bill.
State legislators in California or New Jersey pass a similar bill.
Your state legislators bring the bill up and pass it because they want to be cool like the big states.
Congress determines that taxing the thing only in New Jersey, California, and your state impedes interstate commerce and attaches the bill at the last minute, in the middle of the night, to a joint house resolution honoring Mom, because who could vote against Mom?

So you better start saving up, because the IRS is going to find out you bought Illinois Avenue in 1982 without paying sales tax and is going to want interest and penalties.

- posted by Brian J. @ 8:04 PM