Harvard Scholar Calls for Taxing and Regulating the Metaverse
Christine Kim, a Harvard legal expert and Yeshiva University law professor, recently issued a research paper outlining grounds for not only taxing the metaverse but also considering it as “a laboratory for experimenting with cutting-edge policy.”
Kim claims in his article, simply titled “Taxing the Metaverse,” that the metaverse allows players to produce and build wealth exclusively inside its ecosystem.
This expanding wealth sector, according to Kim, should be taxed: “Because economic activity within the Metaverse satisfies the Haig-Simons and Glenshaw Glass definitions of income, its exclusion will create a tax haven.”
The report goes on to explain that the metaverse’s ability to “record all digital activity and track individual wealth” means that governments may track and tax revenue immediately upon receipt, which Kim believes might upend the status quo in US tax law.
Kim also suggests adjustments to the way taxes are collected. According to the research, metaverse users in the United States are now taxed only upon realisation or participation in a taxable event such as a withdrawal.
According to Kim’s plans, earnings, “including unrealized gains and income,” would be taxed immediately upon receipt, even if they remained in the metaverse.
In such a case, the most pressing issue would be enforcement. Kim proposes two possible techniques for enforcing tax law in the metaverse. The first would entail specific platforms withholding taxes on users’ behalf.
The second option, which Kim considers less desirable, is residence taxation, which would rely on platforms delivering tax information to users, who would then file and pay their own tax obligations.
The report also contends that taxing the metaverse provides additional opportunities for legislators, even those who are not generally interested in Web3 and metaverse technology.
“The Metaverse can be a laboratory for experimenting,” Kim argues, adding that it “has the potential to simulate scenarios that are unlikely to ever occur in the physical world.”
Keywords: Metaverse, Harvard, Facebook
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