Rambling from the item-based model to taxes, to Woman’s suffrage and back to online human rights

Rambling from the item-based model to taxes, to Woman’s suffrage and back to online human rights <o:p> </o:p> When I discuss the item based business model the first thing people reject with is that they believe that American consumers do not like to be able to buy their entertainment as they please. This is of course well refuted with Habbo Hotel, Gaia Online, our humble offering GoPets, and of course the thriving trade in gold and characters in WoW and other big MMOs.

Then out of frustration they bring in the IRS and say that when I discuss items and real-money trades that I have only one or two more incantations before summon a lesser tax demon.

This discussion of taxing game assets either in the clear point when they are converted into cold-hard dollars on online auction site or even inside the game (where if they are property then in theory they are just as taxable as goods or services traded in the real-world economy) I find as just plain silly.

Why?

About 10% of the current US Economy (and about 18% of the European economy) is underground or not taxed and it is accelerating. Plumbers, electricians, auto-mechanics, most gambling, and yes the 40 million people on eBay all have large fractions of people who do not report the cash earnings and thus do not pay taxes.

Imagine having to register a tax-id with your wow-account and every time any loot in the game drops a micro 1099 report is squirted off to the IRS because you have just harvested 2 units of copper ore that are worth 2% of 1% of 1 gold coin which is in turn worth about 5% of a dollar. That works out to be 0.001% of a dollar. Do you really think the IRS is going to get on that when they can go after the auto-body repair guy with a single $500 transaction? Yeah, I don’t think so either.

In fact, I will go a step further and share a view into my weird political thoughts on how to combine far left and far libertarian tax policy. I think the IRS chasing people who cut hair out of their homes, or who cut your grass, or someone earning a $50,000 salary are wrong to go out and tax. However I do think that Police Commissioners should pay taxes.

Why?

Because they are saving -0.5% of their income – in other words Americans just plain spend all the money they make. More than all of it in fact, they are spending down their home equity (or at least they were until the sub-prime market caused havoc across the mortgage industry) and buying as much stuff as they possibly could.

When they spend that money 100% of that money goes directly to whatever good or service they like – that is freedom for the people – and it is freedom for the corporations to compete with each other where it counts – in the market. What I do not like is our complicated tax code that is constantly being distorted by this or that special interest group.

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My solution to the tax code mess? Simply eliminate all income taxes from any income less than $100k per year, and to remove all classifications of income. Whether you make your money from royalties, renting apartment units, short-term or long term capital gains, bonds or any other method – you are earning money and all the income over $100k should have a flat rate that when factoring the removal of deductions and classes of income balances the taxes from the middle class.

That way the IRS would only have to focus on the 19% of US families with income over $100k, the other 81% would be free to live and work and spend however they see fit and it would stimulate even more economic growth. And that top 19% would only pay on the money over the $100k.

This is of course impossible as all the people that this would benefit somehow think there is some big benefit to having to make sure everyone pays their fair share, and all of the people who really have the power over congress are the ones paying 15% on long-term capital gains and would not take kindly to this tax code, not to mention the retail accounting services industry that would now have nothing to do.

Anyways that was me taking a real-long time to say everyone please shut-up about taxes on virtual items in games for it is so far down the list of priorities that the Maldives will sink below the waves before the IRS gets to checking on the income your guild is making for running out-of-guildies through heroic instances for primal nethers.

Property Rights I have been arguing is not something that is a legal problem now – we as game operators are not being forced into providing property rights to online gamers from courts or governments. I remember at Seattle one of the guys in the Q&A session provided plenty of examples of horrible contracts that mobile phone operators and even retail banks get away with legally.

I really do not care if Bank of America is worse than Wells Fargo or Washington Mutual, the point that I trying to make is that Second Life has made nearly of all its progress with the meme that it offers advanced forms of property rights. As I started this BetterEula project I pointed out that SecondLife has performed amazing in its marketing as it really does not provide any property rights in its Eula.

Marketing is the leverage that is developing and will develop property and human rights in the online spaces going forward, not legal ones.

Now to make this rambling post truly ramble let me take a u-turn in history and go back to woman’s suffrage in the USA, in August 1920 10 million women gained the right to vote the same as men. How did they get this right? Were the men of the USA backed into a corner and forced to ratify the 19^th Amendment like when King John was locked out of London and forced to sign the Magna Carta?

Keep in mind that this enfranchisement dwarfs the number of new voters created either in the Founding or Reconstruction – ten million verses hundreds of thousands.

Being educated in California public schools I had no education in woman’s suffrage until I read about it just now – and so I am excited about how it came about. Guess what? It was marketing!

Let me explain.

Elizabeth Cady Stanton and Susan B Anthony were of course the leading women to argue for women in front of the senate in the late 1870s and it was their words that ultimately formed the 19^th Amendment. And yet, shamefully disgraceful it took another 40 years for women to gain this right, what was going on in these 40 years leading up to 1920?

Well, where did women first get the vote? 1869 the Wyoming Territory was the first to grant women the fundamental human right to sovereignty through voting. Later Colorado, Utah and Idaho expanded the franchise to women. Why did the men in these states share the power with women ahead of the West Coast, the East Coast, the South or the Midwest? Why did the Rocky Mountain States lead?

Well it boils down to the fact that there just were not very many women in the Rocky Mountain States, and men being men, like women and wanted them to come out west and up into the mountains. Turned out this was later paralleled in New Zealand and Australia as a means to entice women to move down-under.

Later the states near the Rocky Mountain States needed to compete with those states for women and in turn granted women franchise.

Later as the ball started rolling it became obvious to up and coming state legislators that it would be profitable to their career to solicit future votes from women on a pro-suffrage platform.

And so it rolled as a domino…

…I see this happening for online citizens.

-Erik

Originally posted on LiveJournal