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Lawmakers Trying to Head Off Massive Taxation
An anonymous reader writes to mention a Reuters article about a lawmaker's attempt to stop the Government's interest in taxing Massively Multiplayer Game content. R-New Jersey Jim Saxton is cautioning against exploring the taxable status of in-game items. From the article: "'The goal of the forthcoming Joint Economic Committee study is to help lawmakers understand the issues involved and head off any premature attempt to impose a tax on virtual economies,' he said. Under current law, Saxton said if a transaction takes place solely within a virtual world there is no 'taxable event.' Dan Miller, chief economist for the Joint Economic Committee, said earlier this week that the committee's study would start with a blank slate and be completed by the end of the year."
That if I get a monopoly in Monopoly(r) that my future games have to be government regulated?
That I have to declare income taxes on all cash received while playing PayDay(r)
That I have to declare my tax status to the IRS when I finish the game of Life(r) and retire?
-my internet connection, my computer purchases, software purchases, etc???
every day http://en.wikipedia.org/wiki/Special:Random
According to Blizzard, I don't own anything inside of the World of Warcraft. Why the hell would I be taxed on property that belongs to someone else?
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"Every artist is a cannibal, every poet is a thief."
Suppose I'm in the business of making MMRPG items and selling them in the real world. I'm a very small business netting $5,000/month for the past year and a half after taxes.
I decide to expand. I could expand slowly, hiring one talented game-player then, when the business grew enough, another.
Or, I could go to a bank or to investors with a business plan to grow the business at the rate of 2 new player every month until I reach 20 players, then re-assess the situation.
Any lender or investor will want to know how much the business is worth. They will want to know all my in-game assets. A bank may loan me money only if I can put these assets up as collateral. In some cases, the company running the game may have to modify their terms of service for me in order to make this happen.
Knowledge is how to play a game, intelligence is how to win, wisdom is knowing what game to play.
Oh, and before anyone laughs their way to the bank, the kicker is that anything above 100 million is taxed at 100%. All of it. Bill Gates dies, he can't leave more than 100 million dollars worth of assets to any one person. Bill can't take it with him, and nobody who complains about inheriting *only* 100 million dollars can possibly be taken seriously. Here's a giant leg up over everybody else - if you want more you have to earn it.
[javac] 100 errors
I think the Chinese Gold Farmers would disagree with you there. They make a lot from the equivalent of doing that.
That you choose not to do it for profit doesn't mean it can't be profitable.
-- Tigger warning: This post may contain tiggers! --
If I die and leave a taxable estate, you can bet that the government wants their hands deep in my pockets to extract their pound of flesh, even if there is no actual money changing hands
Huh? If you take your money and use it to fire your funeral pyre, nobody will be taxed. If you transfer it to somebody as an inheritance, then that person is taxed -- not you. You're dead, so you can't pay taxes.
Now, with respct to family farms, lets go over this one last time; the fact is very, very few people inheriting farms or even family businesses pay the estate tax.
Figures from the IRS in 2004 show that in that year, across the entire United States, there were only 440 estates where the majority of the value was in a family farm or business. This was 2% of all estates taxed in 2004. There were a total of around seven thousand estates that had some business or farm component, except for the 440 mentioned above, all these estates were made up of a majority of liquid assets. Presumaby in in the 95% of the cases where business/farm estates consist of a majority non-business assets, the inheritor can keep the business by liquidating some of those assets.
But what about those 440 estates? How many small familiy farmers in this were put out of business? Probably none or very few.
Of those 440 estates, the vast majoirty (the 350 valued at $1.5M to $2M) paid a rate of 1.6%. I'm leaving out estates of less than $1.5M because they pay 0%. So if you were a family farmer or small business owner who inherited a $2M estate, you'd have to come up with $32K. Assuming you came to this with no liquid assets of your own, and received no cash equivalents in your inheritance, that's a lot of money. However even in this worst case, it wouldn't be difficult ot raise $32K with $2M of collateral, if you have a half way viable business.
Republicans like to argue as if everybody paid the top rate of 47%. How many farm or business estates paid this rate in 2004?
None.
The highest rate paid on any business or farm estate in 2004 was 22.2%; this was paid by a grant total of 30 estates in the entire country, each of which was valued at over $20M.
It is possible that some of these 30 inheritors had to sell the family business. However as these would net over fifteen million from the sale, they are not exactly starving.
Now, those figures are two years old. What about family farmers today? Well, as of 2005, the exemption is $2M. And if you are a farmer, you get to exclude the value of your land and equipment before you start counting towards your $2M exemption.
By the way, notice how assiduous congress is in raising the exemption for estates from $1.5M to $2M, and how it contrasts with the lack of inflation indexing on the alternative minimum tax, which more and more middle class people pay. Adjusted for inflation the $100,000 benchmark used in 1970 would now be more than 5x as much in current dollars. The people at the lower end of the AMT range don't have anything like the tax shelters that people making over half a million do.
So, this year we can expect only 200 or so farms to come under the estate tax, and that will only apply to cash, not the farm or equipment, and only cash over $2M.
Now you can argue the estate tax is bad policy. You can even argue that the estate tax is morally wrong. However, you can't argue that the estate tax is bad policy or morally wrong because it puts small farmers and businessmen out on the street.
Post may contain irony: discontinue use if experiencing mood swings, nausea or elevated blood pressure.
If the IRS accepts payment in game plat, gold, credits, isk, etc...
Steve's Computer Service, Hobbs, NM
Money isn't real, it's a social contract. The estate tax is an economic corrector that prevents the growth of an aristocrat class that is forever rich and never has to work. Wealth accumulates without work when interest is better than inflation. It is not fair to get an infinite amount of reward over many generations from a finite amount of productivity over a few generations. Society doesn't have to foot the bill for Paris Hilton's lifestyle just because her ancestors were productive. It is neither beneficial to society nor fair.