Sim pickings: real taxes on virtual worlds.

• Author: Walker, Jesse
• Position: Jim Saxton proposes Internal Revenue Service to tax transactions over Internet - Brief article

IF YOU WERE planning to pay your World of Warcraft orcs in cash, you might want to rethink your plans. In a press release issued on October 17, Rep. Jim Saxton (R-N.J.), then chairman of the Joint Economic Committee, noted that "there is a concern that the IRS might step forward with regulations that start taxing transactions that occur within virtual economies."

It's hardly news that the Internet's virtual worlds, from vast multiplayer games like World of Warcraft to complex communities such as Second Life, include virtual money and virtual goods. It has been five years since the economist Edward Castronova concluded that EverQuest had an economy larger than India's or China's. That's not exactly an apples-to-apples comparison, but it's not an entirely unfair contrast either, given the extent to which people are willing to trade actual dollars, euros, or yen for virtual currencies and virtual products, from magic swords to imaginary real estate. The Australian Tax Office is already casting its...