It’s election day—and who says that Congress doesn’t have a sense of humor?
Yes, those fun-loving guys and gals at the "U.S. Joint Economic Committee"—whose responsibility is to " heir primary tasks are to review economic conditions and to recommend improvements in economic policy" are investigating the possibility of taxing "virtual money."
What exactly is "virtual money?" It turns out, that under the very nose of the Joint Economic Committee, there has been an explosive growth in the Internet. Wow! What a revelation! And with it, a dramatic increase in the popularity of online gaming and "virtual economies" where financial transactions take place within an online community.
Now, if you don’t spend hours online each week fighting off an Arctic Ogre Lord and hours more wading through the Tax Code, you probably haven’t thought much about whether Uncle Sam will someday tax your virtual winnings from Internet gaming.
But, you’ll be pleased to know that the U.S. Joint Economic Committee has done just that. And they’ve come up with the common-sense recommendation that the IRS not impose "premature" taxes on virtual economies.
The IRS doesn’t necessarily agree, although to be fair, they’re not entirely familiar with the concept. Their thinking goes something like this: "Goods taken in trade or won at play are taxable the moment they fall into somebody’s hands, even if they are not sold for money."
We’ll see how all this pans out. In the meantime, here’s something to ponder: we’re all using a form of "virtual money" every day, because U.S. dollars are created out of thin air by borrwing them into existence through the Federal Reserve. They’re no longer backed by gold, silver or anything other than the "American dream." But, unfortunately, the IRS does insist on taxing us when we accumulate them.
