A lot of folks get pretty touchy - borderline psychotic would be more apt actually - whenever it says April on the calendar. This is due to one of the many constants in the Game of Life: Taxes. Scott Sharkey of 1up decided to take some time to give a good hard look at how real-world taxation interacts with Blizzard's virtual and addictive World of Warcraft.

Sharkey notes that Taxable income includes everything from tangibles (cookies, and furnitures) to ephemeral and subjective (art pieces, concert tickets) things that you own. So by that logic, that level 70 character that you've been exploring, raiding, simulating, farming, pvp-ing the past year, that you own, isn't any more intangible than stocks. The question now is, should virtual property be taxed?

Sharkey notes that the nice part about this is that it's not our job to figure that one out. it's the problem of a certain congress">Joint Economic Committee in the US Congress. Thankfully former committee chairman Jim Saxton believes that teh internet and MMOs and all the stuff in that bag, represent an area where tech has outpaced law. He believes that messing around with it "would be a mistake." Not because it's morally wrong to do so, but because it would just be difficult on the government's part.

They could just tax hours spent playing, instead of virtual property owned, but then third-world, er, third-party leveling services sort of mess that up. Same character, not you playing. Yeah. Saxton was right. It's too mind-boggling to figure out.

The whole thing is a great read. If you feel like getting more of what Sharkey had to say feel free to head to his piece via our "read" link below.

  

Dan Miller is one cool dude. Read on, and find out why.

Business journalist H.S. Ayoub recently submitted to Internet Stock blog SeekingAlpha a write-up on his experiences in Linden Lab's Second Life. Obviously the fellow focused more on the business aspects of the metaverse. He covered the recent activities of Cisco Systems, IBM, American Apparel, and Toyota within the virtual world.

What's noteworthy though about his report is his input on government – to be specific, the Joint Economic Committee of the U.S. Congress - plans to start taxing transactions taking place within Second Life.  Ayoub takes time to note Dan Miller's view on the subject. Ayoub writes:

While the flurry of activity and monetary spending can attract the attention of businesses, it can also attract the government. The Joint Economic Committee of the U.S. Congress is taking a hard look at the possibility of taxing income derived from virtual online worlds. But the general consensus is against any taxation at this time. The blogging community immediately condemned the committee's announcement last year, and Dan Miller, senior economist on the committee, agrees.

He believes that a realistic attempt at taxing virtual transactions could prove very difficult. It would place too much pressure on virtual administrators, such as Linden Lab, to keep tabs on the millions of transactions and player activities that occur every day. This, Miller believes, could slow down the impressive innovation taking place. It is not surprising to learn that the 64 year-old Miller is an avid World of Warcraft fan, and player!

Great, the great online businesses on Second Life, indirectly defended from taxation by a World of Warcraft player. The amazing teh internetz is. Amazing.

Sometime in the next few months, the Joint Economic Committee of Congress will publish the results of an ongoing investigation into the economies of World of Warcraft, Second Life, and other massively multiplayer online games.

What does this have to do with gamers? Well, this report could quite possibly determine whether or not the virtual gold that millions of online gamers earn and spend each day will incur real-world taxes.

A PC World article that we read today pegs the exchange rate for one gold piece in WoW at an unofficial rate of seven to the U.S. dollar. Second Life, on the other hand, actively encourages a real-world type of economy with an official market-driven rate of roughly 50 cents per 100 Linden dollars. Most game companies - and gamers - frown on buying gold from gold farmers, but when there's an easy way to get your hands on stuff, people will be sure to flock to it.

So if the report comes out on the side of the IRS and virtual loot is deemed to have real value since it can be sold for real money, will we be seeing the government concluding that every time a fallen virtual monster gives up its prize a taxable event has occurred? Click on the "read" link below to read the full story at PC World.