Legal Scholar Calls for Taxing and Regulating the Metaverse as a Wealth Creation Ecosystem
Summary:
Legal scholar Christine Kim argues in a research paper that the metaverse should be taxed and regulated due to its ability for wealth creation within its ecosystem. The paper explores the potential impact on US tax law and proposes immediate taxation on gains, including unrealized income. It also outlines two methods for enforcing tax laws in the metaverse. The article highlights the metaverse as a laboratory for experimentation and simulation of scenarios not possible in the physical world.
Harvard legal scholar Christine Kim and Yeshiva University law professor recently released a research paper outlining the case for taxing and regulating the metaverse as a unique economic ecosystem. Kim argues that since participants can generate and accumulate wealth within the metaverse, it should be subject to taxation in order to prevent the creation of a tax haven. Furthermore, the paper suggests that the metaverse's technological capabilities, such as tracking digital activity and individual wealth, enable immediate taxation upon income receipt, potentially challenging the current U.S. tax law framework. Kim proposes changes to tax realization, suggesting that users should be taxed on gains as soon as they are received, including unrealized gains and income that remain within the metaverse. However, enforcing tax laws in the metaverse poses a significant challenge. Kim proposes two methods: platforms withholding taxes on behalf of users or platforms providing tax information to users who can then fulfill their tax obligations themselves. In addition to taxation, the paper suggests that exploring the metaverse offers lawmakers the opportunity to experiment and simulate scenarios that are unlikely to occur in the physical world.
Published At
9/4/2023 5:30:00 PM
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