The global economy is in a pretty precarious state and quite recently, in a BBC debate organized as part of the IMF-World Bank Annual Meetings, IMF’s managing director Christine Lagarde warns that the world economy has entered a dangerous phase. World leaders are feeling the money crunch and leaders of industry are admitting that their prospects are a little less than bright.
In the BBC debate, the two most prominent problems include the crisis of confidence in the Euro area and the economic problems in the United States. These are the places that developing countries look to for aid and support, but in their current states they seem to be the ones in need of support.
With the deficit currently dividing America along the right and left of the political line, politicians need to get more creative about where they get their revenue so that the status quo (well, that prior to the economic crisis) can be maintained.
Countries need to look for new ways to generate revenue to fill their coffers again. As suggested in the BBC debates, America needs to be less reliant on excessive consumer spending and bank more on exports and manufacturing.
But these are measures that will take time and effort, and in the current state, it is imperative to look to other avenues for generating profit right now.
As a gamer, I have a proposal that provides an answer to all these problems, but it involves moving the tax tables to what economist Edward Castronova calls “the synthetic world.”
There is untapped wealth in the virtual world of games and the sooner the government realizes this, the sooner we will all be able to climb out of the debt hole.
Online Transactions within MMORPGs are an untapped source of revenue
As of this writing there has been no move yet to tax in-game economies, but the idea of taxing them isn’t new. MMOs are communities within themselves, and where there are established communities there are transactions; where there are transactions, there are taxes. And in this case, there should be.
All over the world there are billions of people going online and playing into the system. Billions.
Assigning Real World Value to Virtual Transactions
Exchanging real money for virtual money may seem like a strange concept to non-gamers and even to some gamers. Why pay real dollars for digital coins? Think of it this way: when you go to a foreign country, you have to exchange your money for the local currency to be able to transact with the locals, right? This also applies to the virtual world, you exchange your currency (real-world money) to be able to transact in the synthetic world. Your real world money now forms part of the in-game economy.
So now that your real-world money has found itself inside the game you’re playing, what’s next? How can it possibly contribute to pulling the country out of debt? Well, before we discuss your active participation into taxation, let’s first talk about the people who are getting around to having to pay for their fair share.
Illegal Gold Mining and Power-levelling
Whether you’re playing World of Warcraft, Runescape, EverQuest or any other game, levelling up is important to being able to play the game better. In some cases you’ll need to level up in order to have access to certain things or to be able to beat stronger characters. This takes time and effort and some gamers just don’t have the patience to grind. So what these gamers do is to have someone else do the grind work for them. There are sites that offer to do the grind work for gamers: and it’s not just leveling up, it’s also for gaining gold and getting better stuff in general.
In order to put a stop to this unfair practice and save those people in third-world countries from the tyranny of gaming for others, games should cooperate with the government and set up a system where everything goes through the proper protocol. Need to mine? Get a permit to mine and set an environmental limit that would make it fair to all other users. If these third party sites want to stay in business, they need to be legitimate and being legitimate means that the players are protected as well. Games should put a system in place where transactions with third-parties are ported and have the government look in on these transactions just to make sure that everybody keeps their hands clean.
Teaming up with the government is a nationalistic duty and choosing not to aid during a fiscal catastrophe is really tantamount to treason.
With all the illegal and unfair stuff out of the way, we can now discuss the business of addressing key issues in the taxation of in-game economies.
For every game, it should be a requirement to have a Chief Economist to keep the in-game economy well-balanced and productive. The Chief Economist will have a lot to contend with as a revised set of taxation laws will apply covering every transaction that takes place within the game.
First off, taxes should be proportional. Ordinary weapons and items will be taxed lower than special items depending on how they will be valued under the tax laws. The shiny gold armor and the personalized chain mail will be considered luxury items and therefore will have higher taxes on them. And ordinary gamers need not have to worry because the virtual world is the best place for taxing the rich or at least those who are big spenders. If you spend within your means, you’re fine: it’s those players with the flashy stuff and the too big swords that are going to have to pay through the nose.
What’s great about the new laws is that it will not discriminate against minors: if they own an account then they will be charged and treated just like any adult. There is nothing quite like getting hit with taxes that teach a young boy or girl what it means to be an adult. And as the owner of the account, they will have the juridical personality to be able to answer for any charges brought against them, which is truly pushing the phrase “you’re playing with the big boys now.” Yes, kid, you sure are!
In no time at all, the real world will be able to recover from economic crisis with the creative collective power of gaming. Huzzah!
**Note** This is a piece of humor.