Late last year, a congressional committee began examining the idea of taxing property inside digital worlds such as Second Life. If that happens, a digital Boston Tea Party should break out, perhaps making it the only place in America where a real revolution could still happen.
Over the holidays, an article in Esquire magazine lamented that Americans will probably never have a revolution again. On the whole, the author argued, Americans are too fat and content to care if their taxes go up or if they are lied to about weapons of mass destruction.
That may be the case in the physical world, also known as the “meat world,” but perhaps it is still possible to see revolution in a digital space.
Second Life is the massive multiplayer online game (MMOG) where users get to own whatever they create. This commitment to strong property rights within the game has spurred a vibrant economy that’s growing as though on steroids.Once people create something inside the game, they can sell it for “Linden dollars.” Because the Linden dollar trades with the U.S. dollar, there are a number of people making a lot of money creating digital goods.
In December 2006, there were more than 14 million total transactions ranging from 1 to 500,000 Linden dollars. One U.S. dollar equals approximately 266 Linden dollars, but that price can change, of course, depending on the market. This activity has sparked the interest of the IRS and lawmakers who see an opportunity for a tax grab.
“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,” Dan Miller, senior economist for the Joint Economic Committee, told Reuters.
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