Paul L. Caron

Monday, January 26, 2009

Lederman: Lindens in Second Life Should be Taxed Like PayPal Profits on eBay

Second Life Leandra Lederman (Indiana) has published EBay’s Second Life: When Should Virtual Earnings Bear Real Taxes?, 118 Yale L.J. Pocket Part 136 (2009).  Here is the abstract:

Millions of people participate in virtual worlds—immersive online forums such as Second Life and World of Warcraft (WoW). While some online activities lack significant economic implications, one of the attractions of Second Life, which is designed to be a commercial platform, is the prospect of making “real money.” This essay argues that profits received in the form of Lindens (Second Life’s currency) should be taxed in much the same way profits received via PayPal, a widely used electronic-payment system, are. Although Second Life profits could instead be taxed once the taxpayer sells for real money (“cashes out”), that would create a special exception for Second Life that does not exist for platforms such as eBay. It would facilitate abuse and distort economic activity.

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Comments like yours are why I thank GOD you aren't in any real politics or control. Taxing monopoly money isn't only laughable, it's ludicrous. And it's nowhere near the same thing as "PayPal profits from eBay" (which is a backward statement in itself as it is eBay that owns PayPal and PayPal has nothing to do with any profits you make.

In order to sound even close to knowing what you are talking about (because maybe you do, but it certainly doesn't look like and I'll give the benefit of doubt that you do know what you talk about, unlike 99% of everyone else that writes about virtual words)...

I will help you get your message out to the masses of throngs that read your illuminating words here by clarifying what you *really* meant to say:

When users of the Second Life platform, (owned and run by Linden Research, D.B.A Linden Lab,) and of any other internet entity where trading tokens, such as the fictional "Linden Dollar" can actually be traded into legal tender and real currency, those users should be taxed when they transfer that currency into their bank accounts or received check in the mail.

It should be Linden Lab or other entity who sends the check, or deposits those funds into the user's hands who should do the reporting, just as employers report on employee earnings.

There. I don't claim to be a writer. With a little research and genuine care about getting what you write right, you would have said the same thing and not been complete WRONG.

Now pay me as I've written more than you in reply to your own "article" :P

Posted by: Ari Blackthorne | Jan 29, 2009 2:38:17 PM

What are you talking about? Unless people use secret bank accounts that they hide away from tax authorities (which they could do with any other real life business as well), the balance of their transactions in Second Life is completely visible and will be taxed. I really don't see your point.

Posted by: Moni Duettmann | Jan 27, 2009 2:39:32 AM