Christine Kim, a scholar from Harvard Law School and a law professor at Yeshiva University, recently wrote an article titled “Taxation of the Metaverse.” In this piece, she argues for the taxation of emerging wealth within the metaverse.
Kim contends that the metaverse’s distinctive ability for users to accumulate wealth necessitates prompt regulatory intervention through taxation. Failing to tax this sector would result in creating a tax haven, given that the economic activities in the metaverse align with the definitions of income by Haig-Simons and Glenshaw Glass.
In her article, Kim suggests that the United States has a chance to transform the current tax landscape by implementing taxes within the metaverse.
She advocates for a revision of the tax framework to include virtual spaces, proposing that taxes should be levied on “taxable events” such as withdrawals, whether the assets are kept in the metaverse or not.
Kim outlines two main methods for taxing activities in the metaverse. One strategy involves individual platforms functioning as tax intermediaries, directly withholding taxes from their users. Alternatively, a “residence tax” could also be implemented.
Furthermore, Kim theorizes that the metaverse could act as a platform for financial and social experimentation.
She envisions this virtual domain as offering unique opportunities to test scenarios that might be unattainable or impractical in the physical world.
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