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- Sat Feb 11, 2017 12:33 pm
#32676
Passage Discussion
Passage A
The author of the first passage begins by introducing the subject of online multiplayer games, played by millions of people worldwide, in which players, for example, choose characters to play as they join together in various quests.
An economist named Edward Castronova noted as he played one such game that the game had its own virtual economy, in which virtual goods are awarded for play (such as killing creatures) and traded with other players, and longer-term play leads to a player’s building greater wealth.
When some participants decide stop playing the game, they use auction sites to sell off virtual possessions, which, the economist noted, was a form of currency trading, in which virtual wealth had a value in real money, and players were creating wealth by killing monsters or skinning animals to increase their virtual wealth.
Passage B
The second passage also deals with the topic of online multiplayer games; most don’t allow players to buy and sell virtual items, but some go so far as to give players intellectual property rights in their virtual creations.
When virtual goods are sold for real money, the author provides, that income would intuitively be taxable. The author then poses several questions: should virtual acquisitions, or “profits” from virtual trades, be taxed when they only exist in the virtual world? These are important questions, the author says, which governments are pressured to answer, since some virtual economies are the same size as those of small countries.
The intuitive reaction for most people, the author says, would be that virtual acquisitions should not be taxed despite the taxability of real-world non-cash acquisitions, and the author shares this perspective. A more suitable analogy, the author asserts, is to other property that comes from effort, such as fish that are caught in the ocean, which are not subject to tax until they are sold.
The author closes the passage with the assertion that sales of virtual items for real world money, or purchases of virtual items with real money, should be taxed. This would protect those seeking only entertainment from taxation, but would not provide the same protection to those seeking a shelter from real-world taxation of commerce that should be taxed.
Passage A
The author of the first passage begins by introducing the subject of online multiplayer games, played by millions of people worldwide, in which players, for example, choose characters to play as they join together in various quests.
An economist named Edward Castronova noted as he played one such game that the game had its own virtual economy, in which virtual goods are awarded for play (such as killing creatures) and traded with other players, and longer-term play leads to a player’s building greater wealth.
When some participants decide stop playing the game, they use auction sites to sell off virtual possessions, which, the economist noted, was a form of currency trading, in which virtual wealth had a value in real money, and players were creating wealth by killing monsters or skinning animals to increase their virtual wealth.
Passage B
The second passage also deals with the topic of online multiplayer games; most don’t allow players to buy and sell virtual items, but some go so far as to give players intellectual property rights in their virtual creations.
When virtual goods are sold for real money, the author provides, that income would intuitively be taxable. The author then poses several questions: should virtual acquisitions, or “profits” from virtual trades, be taxed when they only exist in the virtual world? These are important questions, the author says, which governments are pressured to answer, since some virtual economies are the same size as those of small countries.
The intuitive reaction for most people, the author says, would be that virtual acquisitions should not be taxed despite the taxability of real-world non-cash acquisitions, and the author shares this perspective. A more suitable analogy, the author asserts, is to other property that comes from effort, such as fish that are caught in the ocean, which are not subject to tax until they are sold.
The author closes the passage with the assertion that sales of virtual items for real world money, or purchases of virtual items with real money, should be taxed. This would protect those seeking only entertainment from taxation, but would not provide the same protection to those seeking a shelter from real-world taxation of commerce that should be taxed.