When Experts Expound on Things They Know Nothing About

Originally posted 3/29/07 on Avataritoria.

Via Poorer Than You, an article on CNN Money called Second Life’s looming tax threat.”

The only “news” in this article isn’t news — if people in Second Life are making real live US dollars, the government wants its cut. Snore.

But the article goes further, making the absurd suggestion that entirely virtual economies, like the one in World of Warcraft, should be taxed by the US government.


Grace Wong, CNN Money staff writer, quotes Christopher Frenze of the Joint Economic Committee of Congress, who sensibly points out that “as long as virtual activity stays within the virtual economy, it shouldn’t be taxable.”

But there are always two “sides” to any argument, and trust the mainstream media to find the “dumbass” side. “As soon as you start looking at what’s going on in these worlds, they look a lot like real economic transactions,” says Texas Tech professor Bryan Camp. According to Wong, Camp believes that “profits that come from, and stay in, the virtual world are taxable.” I hope that’s a misquote.

As Stephanie from Poorer Than You says, “Unless the IRS is prepared to tax my Monopoly winnings, they should really stay out of this.”

So is there really a controversy here? Is the IRS going to tax my WoW gold? No. Although Ms. Wong would like to imply an impending danger, she quotes an IRS rep:

“Any time someone wins a tangible prize or award, the value is reportable as taxable income. An accumulation of ‘points’ would not result in tax consequences, but redeeming or selling them for money, goods, or services would.”

So, there’s no there there. Thanks, CNN Money!



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