Congress to Second Life: No new taxes?
By Adam Reuters
The senior economist for Congress’ Joint Economic Committee sent a few signals about the its long-awaited report on virtual world taxation in a Second Life appearance on Monday.
“We are not looking to impose taxes,” Miller told a packed house at the Metanomics session. “In my opinon the less government regulation you have on virtual worlds, the more they’ll thrive and develop.”
Miller’s statement echoed the position of committee’s then-chairman, Rep. Jim Saxton (R-NJ), who said last year that taxing virtual economies “would be a mistake.”
At the time, both the committee and Congress were controlled by Republicans. After the 2006 midterm elections, Democrats took control of Congress and the JEC. Sen. Charles Schumer (D-NY) is now the chairman, with Saxton a ranking GOP member.
Miller warned that the final decision about taxation in Second Life might come not from Congress but from a ruling by the Internal Revenue Service, which could conclude that virtual transactions constitute a barter exchange — even if the Linden dollar is not “real” money.
IRS Topic 420 states:
Bartering occurs when you exchange goods or services without exchanging money. An example of bartering is a plumber doing repair work for a dentist in exchange for dental services. The fair market value of goods and services exchanged must be included in the income of both parties.
