Christine Kim, a scholar from Harvard Law School and a law professor at Yeshiva University, recently penned an article called “Taxation of the Metaverse.
” In this piece, she argues that the emerging wealth generated within the metaverse ought to be subjected to tax regulations.
Kim suggests that the metaverse’s unique capacity for users to amass wealth within its ecosystem requires immediate regulatory attention in the form of taxation.
Excluding this sector would create a tax haven, as its economic activity in the Metaverse meets Haig-Simons and Glenshaw Glass’ definitions of income.
In her article, Christine Kim posits that the United States has an opportunity to disrupt the current fiscal landscape by implementing taxes within the metaverse. She proposes altering the tax framework to account for this virtual space, suggesting that users should be taxed based on “taxable events,” like withdrawals, regardless of whether the assets remain in the metaverse or not.
According to Kim, there are two primary ways to levy taxes on metaverse activities. One approach would be for individual platforms to act as tax intermediaries, withholding taxes directly from their user base. An alternative approach, known as the “residence tax,” could be applied as well.
Kim further speculates that the metaverse could serve as a testing ground for financial and social experiments. She believes that this virtual realm offers unprecedented opportunities to simulate scenarios that may be unfeasible or impractical in the real world.