Monday, October 16, 2006

Taxing an Illusion

You know that bureacrats have become overly self-important when they seriously consider taxing virtual transactions.

Users of online worlds such as Second Life and World of Warcraft transact millions of dollars worth of virtual goods and services every day, and these virtual economies are beginning to draw the attention of real-world authorities.

Seriously? From a purely intellectual point of view it would be interesting to see consumption dry up after taxing was imposed. It would be a real life illustration on the damaging effects of government policy.

Who knows, such a move could spawn an entire generation of libertarians and other small government types.

More likely, though, is that the US is going to chase out any semblence of internet presence out of the country. Between the anti-gambling legislation, this and any other nonsense that the Fed thinks up, the US is going to appear very hostile to internet companies.

HatTip: Greg Mankiw

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