Will Gold Farming Become Taxable?

gold farming

Selling virtual items and currency for real world money certainly isn’t anything new for MMORPGs. While less common in Iron Realms games, it occurs every day in large games like World of Warcraft. The reality is, gold farming is a billion dollar industry.In the spring of 2011, the UK Guardian gave a first-hand account of prisoners forced to play games like WoW around the clock. Their characters built up credits the guards then traded for real money, at the tune of $500 or better per day...or nearly $30,000 per year! As someone who plays free games produced by Iron Realms, I could live quite comfortably on that kind of salary. And if I lacked a conscience, it could happen! Prisoners not meeting their quota can expect harsh retribution from the prison guards. As one prisoner subjected to long shifts of gold farming stated, “If I couldn’t complete my work quota, they would punish me physically. They would make me stand with my hands raised in the air and after I returned to the dormitory they would beat me with plastic pipes. We kept playing until we could barely see things.”

 

Overseas gold farming is so out of control that some countries are having trouble controlling it. Unlike sweatshops, which fall under the scrutiny of laws regulating things like overtime pay, minimum wage, and child labor, exporting virtual goods is completely legal -- even to European countries known for stricter policies. Another contrast between tangible and virtual industries is that gold farming yields a bigger profit margin! According to a Massively article, an impressive 98 cents from every dollar made from gold farming stays in the nation where the work took place, compared to 7 cents per dollar made from the coffee industry. Not to mention, sitting at a computer is a much safer job for many low-skilled, uneducated workers than manual labor such as mining or real farming.

 

 Gold Farming Companies

Just like with tangible industries, China’s growing economy lends its influence to virtual industries also -- even gold farming. Smaller commercial ventures find themselves taking a backseat to larger enterprises employing cheap labor -- like prisoners. An article from Discovery News reported that one Eastern European college student built up a small company between 2010 and 2011. It employed nine people. Richard Heeks, director of the Center for Development Informatics at the University of Manchester in the UK and an expert in virtual economics, said that “competition from Chinese gold farms -- just like producers of real goods -- recently forced the Eastern European student into virtual bankruptcy. In the coming years, big multi-player game companies are starting to cut these middlemen out of the equation by selling credits to players instead charging subscription fees.”

 

Countries are catching on to the practice of gold farming and taking action by passing laws taxing the sale of virtual goods paid for with real money. The sale of earned income from virtual items is taxable in Australia. China banned the sale of real goods using virtual currency, but not the reverse. Korea ruled that exchanging virtual currency for real money is legal, but subject to taxation. Americans get off a bit easier, though! In its  National Taxpayer Advocate's 2008 Annual Report to Congress, the Internal Revenue Service expressed concern that virtual worlds are a growing source of tax noncompliance...but currently has no laws to deny or tax the sale of one type of economy for the other. They’re missing out on a golden opportunity. One blogger reports that over 16 million people are estimated to have active subscriptions to Internet-based MMORPGs. And that doesn’t include the players who avoid subscription fees altogether by playing free games online, like the ones produced by Iron Realms.

 

What are your thoughts on the topic? Your comments are welcome in the spaces below!

 

Author: Anne Livesay

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Comments

I am not for taxation of gold farming but I am also not for slave labor. Something should be done to discourage organizations that do this.

Definitely against slave labor. Though it may be debatable whether being made to play games is considered slave labor.

is it really playing?

hmm

hmmmmmm

Anything you don't do willingly is by no means a game. It's roughly the same as taking a bunch of stereotypically scrawny basement dwelling MMO players  (Not you guys of course!) and letting people play to see them be forced to play football.

Good analogy. I hate playing football and other contact sports.

So those aren't games? Games are not defined by enjoyment in any game theory class I've heard of.

Great analogy!

No

It certainly isn't.

uh huh.

Tedium should be removed from MUDing where possible

If it's tedious, you're not doing it right... MUDs give a vast amount of freedom, you don't have to just grind through levels, unless that's something you enjoy

I can't think that it would be fun if you are FORCED to do it.

i would if your being misstreated like being hit with pipes i meen i like playing games as much as the next guy but not to be forced to thats just ubserd. i meen hell these people might as well be selling drugs legaly there making so much (you can make 500 a day in the usa growing weed in a small room or more for biger ops that are harder to hide about the same as these guys but less hassal (and more cash for the biger ops) if you ask me as for taxing it hell ya pay off our deit for gods sakes. for a job as long as i got paid i'd do it but not to be beat on thats also just stupid you can motivate people in better ways then assalt. and as for the prisioners i have no problem with them working to pay off a deit to there respectied country but i do not think they should be beat for online games that just seens wrong to me but i understand different people see it differently. also i dont think they should be forced to play for 12 hours strait it really messes wit you.

Sorry I did try to read your comment, but can't make it though it.

Agreed! This is disturbing indeed@

Why

is it even a legit topic? :<

It is slave labor, their not getting paid for it, forced to work (play) long hours at a time till your nearly blind, and possibly get beaten with pipes. Seems like a gaming hell to me.

You're being forced to do something and receiving no profit from it, despite profit being made.

It's slave labor. It might not be a kind I'd object strongly to being subjected to, personally, but that doesn't change what it is or that it's a fucked up thing to do. (Read: GIMME MY DAMN GOLD, PRICKS!)

out with slave labor!

Except in Mhaldor...

Ugh

Agreed.

Something should definitely be done, however I don't think taxing those who make money off gold farming is all together a bad idea. Why should they be exempt from paying taxes like everyone else?

They should pay taxes like everyone else. That said, I know of men and women who do this for a living and make $180,000+ a year. That's good money to make off a game for people who never finished high school. I don't have a problem with what they do, but all of them should definitely pay taxes. No exceptions. Fair is fair.

$180k untaxed? Cool.

Not sure. I never asked. I would think that they do, but who knows...

NO! and it shouldn't be

The gold farming should not be allowed.. Tax them all you want :)

i agree!

;)

 

Of course it should. Any earned income, any money gained should be subject to tax.

Yeah, if you work a job that brings in money...it should be taxed.

Agreed its income.

I would say REAL money. Due to wording, I could really freak out and think that they were taxing gold farming for the sake of making in-game gold. Of course that'd be so difficult to do and very impractical. But if people are hunting gold or training a high-level character for the sole purpose of selling to someone else via paypal or whatever transaction service, sure! I could see how taxing would discourage this sort of behavior.

At least CHARACTER transfer is fairly illegal with IRE:

"Sharing adventurers (characters), or transferring or selling an adventurer from one person to another is strictly prohibited. It will almost certainly be punished by permanent loss or deletion. Do not give permission to anyone else to log on to your character, ever!"

Somewhere I heard that games like Evony had people (*points to ethnic group mentioned above*) simply opening new accounts and training their stuff up simply so they could sell the user/password to someone else once it had reached the maximum potential.

Now if they decided to go taxing my 20K I just made from fishing that I wanted to put toward my boat fund...that's another story. I would NOT be happy.

Why would virtual money ever be taxed? We are talking about virtual currency sold in exchange for RL currency at an amount that generates a sustainable income. Basically, income tax, and therefore, I agree with it. All those who make income should be taxed. No exceptions.

^

I agree with this.

She hit it right on.

The RL funds, anyway. Just like everything else.

The UK already forces you to pay income tax, regardless of how income is earned. I don't see how this is any different.

Correction, any earned -usable- income should be taxed. You can't buy your groceries from the gold you earned from hunting in Achaea :( Ironic eh?

Otherwise you'll get companies moving money around using virtual currencies or people using WoW gold as a money laundering service (actually that probably already happens).  Although it wouldn't be easy to enforce.

Heh

Hrm

Wow

I

It might be my computer but I keep on running into problems with posting comments. As for the article, is anything being done about the slave labour in pirsons?

 

If you're selling so much virtual goods that it's become a sustainable income than yes you should pay taxes

Free credit.

You are

Subtlety is key.

Agreed

Thanks :)

welcome

this

I'm starting a new Achaean gold-farming company.

Being a gold farmer must be an awful job.

I guess it's a bit better than working in a factory, but not much.
I agree with the first post, something has to be done to discourage that kind of things.

Gold taxing would just be silly!

i couldnt stand it....must be sooo boring.

That will be crazy.

Close to anything that earns income should be subject to income tax. This certainly seems suitable.

Of course, those companies that sell in-game currencies do more than just playing the game too. Accounts get broke into all the time, and what they do is sell just about everything they can for more gold while keeping the character equipped, so that they can use the character to kill stuff and make even more gold for as long as they have the account.

I don't like more taxes, but there should be some way to punish this sort of thing.

eh

taxes is what keeps a country going...

It wouldn't really be more taxes, just the enforcement of taxes already there. If you're bringing in RL money from this, then you need to pay taxes on it just like everyone else.

Overseas gold farming is so out of control that some countries are having trouble controlling it.


Really? Surely you can do better than that!

Hahaha, had to read that a couple times before I got what you meant.

This activty should be definitively subject to taxation, like any other form of income. The problem here is the labour slave. Also, spoiling a game is just bad. Why can't people simply have fun playing videogames? 

Oh yeah, my Chinese classes will be put to good use when I go there to get imprisoned.

"an impressive 98 cents from every dollar made from gold farming stays in the nation where the work took place, compared to 7 cents per dollar made from the coffee industry."

 

Is this valid for the Chinese goldfarmers too?

No to taxing gold!

:)

:)

If your making that much money I think you should be taxed for it.

yes, like everything is taxed now days

Yes

I represent the 99%!!!

Imagine how much money I could make as a South African! Working in Dollars would be so profitable and then I don't have to have a real day job, oh how perfect life would be.

Eugh, taxes. No thank you. 

If I could have someone locked up that just sorta gets me gold and credits all day, and the most I would have to do is keep them alive, yeah that sounds kinda badass.  I mean, I'm not heartless (ok, maybe a little) but maybe if I don't have to look at them, and like...hear them...some annonymous person locked in my closet that I occasionally throw raw meat at.  Hrm...I'm a bad person I think.

Ya I pay enough taxes and go through enough with that in RL. I don't need more stress in my escape haha

Even if taxes are paid on gold farming they will still force the inmates to play won't they? It seems like we are talking about two issues at the same time.

 

In-game gold gathering itself should not be taxed, but the conversion of that gold into real life money should be. When it's just in-game gold it is merely being successful at a game (which would be unfair to tax), but when it is converted it becomes real-life income. However, this will not stop slave gaming, the only things that could stop this would be international police coming and stopping this by brute force (they seem a little too busy for this), for WoW to lower the conversion rate so that those prisioners' incomes are lower than the work they would accomplish by doing doing slave labor at a factory (which wouldn't be any better anyways), or for WoW to prevent the players from converting in-game gold into real life money (Seems unlikely).

If you are making money an income from it then you tax it. I'm in the wrong line of work apparently.

Heaven forbid

If you are using it as a way to make real money why wouldn't you expect to be taxed on it. Pay your fair share!

Gold farming in some places seems to be a legitimate thing (depending on the rules of the particular game) done in illegitimate ways. Forcing prisoners to do it isn't the right way to do it, especially if they never see the end results themselves.

Not only is is wrong to do to anyone I find playing a game a reward! I don't punish my boys by making them farm gold they would LOVE it.

As long as I can pay it in virtual currency...

farming hurts my back

Wowser

I don't care if you tax it or not, but if the article about being beaten for not meeting a quota is real then there are some serious problems that need to be addressed (I'm pretty sure the Guardian is like the American Enquirer).  How has this not gotten more media attention if prisoners in a large country are being beaten for not making the prison money?

Not that I want it, but it's coming. As long as something makes money, people will want to tax it.

any income was taxable, right? Doesn't matter how you earn it.

Where the heck do I sign up for this??

I think if I have to pay taxes working for my money, than people who make money by sitting around on a computer all day should also have to pay taxes.  I was unaware this was such a problem, but by the sound of it this is a big issue and needs to be addressed.  

o.O

The things people do :P

All I'm taking from this is that grinding is so intolerable an activity, it's considered both sweatshop labour, and a punishment in prisons.

I agree fully.  Why do we do this to ourselves...

Deal with it.

You can't tax virtual currency. RL currency? Sure...if you gain money for anything, really, you should be able to be taxed on it unless it's already been taxed.

Rage

No taxation without a free credit.

Wow, I had no idea things like this were going on, like in prisons, and that it was so profitable. People can be so clever and so heartlessly greedy.

indeed.

Wouldn't this affect the prices of credits though?

:P

hmm

Mhmhm

1 billion lusternian gold is worth 30k, based on the credits price for the 5k package deal, and based on the current market value of said credits. If I had that I would do it in a heartbeat, pay off the loans to finish university, be able to help my friend's pay off theirs.

I had a feeling you were going say that, heh

NOOO

Tax it. 

At first I didn't see why it wouldn't be taxed like any other business.  I buy goods or serivces, I'm going to be taxed.  Those goods or serivces may be a game that has gold.  Then I was thinking what if someone only wanted to do it as a hobby and recoup the costs of things?  I guess you'd want it as a non-profit then.  Seems like there's a whole business angle to think about there.

 

lol

at pic

^^

WONDERFUL!

If gold to cash transactions were taxable how would it be enforced. I don't want an irs agent sticking his nose into my game.

Express

There must be better ways to stop gold farming than taxing it. This harms honest players as well as farmers.

Yes to RL income taxation, no to slave labour.

Nice article, thanks!

Ages ago, people used to create autoratters in the subs. They were fun, especially when you had a force skill and too much time on your hands...

There is no way gold-farming should be allowed

Ban their IP address. Period

Why should gold farming not be allowed?  Back when it first started I made $1.5k selling rarities (not even platinum) in EQ.  I figured that after the 4+ years I had put into it, averaging 2 hours played a day, I was happy to get a positive return (although way, way below any sort of recognizable wage.)  Hell, I'll never be able to get a positive return like that on Achaea (due to the fact you can't sell IC gained things for OOC money).

 

I also think people are missing out on the quote "an impressive 98 cents from every dollar made from gold farming stays in the nation where the work took place, compared to 7 cents per dollar made from the coffee industry."  The benefit in gold farming is that the people doing it in poorer countries can sell directly to consumers instead of going through layers of customers.

Gold farming is actually quite beneficial all around.  Slavery is not.

Also, I love how you left out the part where the gold farming slavery was replacing a manual labor slavery simply because it was more profitable.

 

"Prison bosses made more money forcing inmates to play games than they do forcing people to do manual labour," Liu told the Guardian.

Correlation != Causation

Without gold farming, they'd still be doing slave labor.  In fact playing video games is probably easier on malnourished (assumption) bodies than coal mining.

If I were in prison i would rather play games than mine coal, but doesn't this sort of thing throw game balance out of proportion? The prison bosses are getting the gold that real players should be getting for incentive.

eep

Taxable or not, let's stop the gold farming or any type of unusual punishment (wouldn't this fit the unusual in 'cruel and unusual?')  Even fun becomes torture when forced.

 

 

i PAY ENOUGH TAXES. NO MORE TAXES!

fail

lol

lol

500/day != $30k/yr unless you take BIG vacations. 500/day counting 52wk/year, 5 work days/wk, however does come up to $130k/yr... add in reasonable vacations and you still sit at $100k/yr. Get into in-game investing well enough on top of farming/levelling/etc gain and profits and you could easily make up for the vacations too, if you've the mind to track an entire economy (I, personally, loved the "auctioneer" addon for WoW once upon a time).

.

.

With Diablo 3 going to a real-money auction house, it seems like there might be potential for armchair farming to become a cottage industry in the US and Europe. If that happens, I'm sure we'll see demands for that income to become taxable.

credit comment

 

^^

And thus we ar eposting for free credits and such

Nothing is really work unless you had rather be doing something else.

I think if something can be exploited you'll find some unscruplious person who's willing to do so.  People will find a way to exploit anyting if possable.  Then there are those of us who do stuff the way it was intended.  The exploiters ruin things for those of us that do the things the way they were intended unforchunet though that is.  I know my state has introdused a internet perchus tax that if something is perchused online and delivered to your home you have to pay taxes on it.  Which I guess is fine. 

^

me up

the key

wow I never heard of this happening.  I knew about gold farming but not people being forced to do it. It's kind of sad and I could see someone losing their mind in that situation..

To support their infastructure, countries generally have to levy taxes where to money is. As currency goes more and more electronic, you can expect that taxes will, too. First it was sales and purchases of real goods online, so the purchase and sale of virtual goods is the next logical step.

 

one could ask if eventualy online money will replace real money

Real-world money you make from selling virtual currency shouldn't be exempt from the taxes people pay for all other kinds of income.

 

...that wouldnt' do much to stop the slave labour though.

Instead of having to work in sweat shops, some younger workers are able to get room and board by working in farming companies, which is a big step up from the working conditions in sweat shops.  Although the living conditions are sub-par relative to the States, at least it's a step up from what they would normally have to deal with.  I'm definitely for it, although it can take money out of the pockets of our millionaires.

I think I'd rather be forced to gold farm in WoW than break rocks all day.

 

We have taxes on everything over here (Australia), probably why we don't have many local game servers.

I think they should be taxed.

hrm

I don't know

I agree with the company selling if it will be bought anyways. Allow the ones who worked hard to create it make the profit from it. Taxed or not.

... a lot more money is changing hands in MMO goldmarket systems than in some African countries already...

So let's give those bastards validation to annoy the crap out of everyone with their
idiotic spam tells....-_-

Someone gives me the equipment/artefacts to be awesome, I'd do it. With the right class it would be awright. I dunno without breaks I'd go a little nuts tho

I paid for a semester of college by farming gold in WoW. >.>

nah

~

Why would anyone want more government control and more taxes? Why would it be better if the money earned is wasted by the corrupted governments rather then those who had the insight to create its source in the first place?

I wasn't aware of how extreme farming was becoming. It's pretty sad knowing that people are being exploited like that.

If it makes profit they want to throw a tax on it.

I'm not surprised, sadly, to know that people can be so damn greedy, but it's disgusting all the same.

I'm an exconvict and I think that, that's actually a pretty f*** cool punishment.

Boo.

Yes

When it slave labour (which it is not always), then no. If, however, the people are working it as a lucrative job then it should be taxed the same as any other job, which it probably is.

I find myself reading this on April Fools Day.  Surely a jest!  Can you offset hours worked against income earned?

Yes

Tax the hell out of the gold farmers who sell it for cash monies.

Taxing something which gaming companies strictly forbid sends a very wrong message of those taxing it seeing it as ok because it can give them money. So I think this is a horrible idea.

 

Everything can be taxed if it's a main method of income, I figure...just because taxes are more levied on people, not on how it's made.

It won't.

hm

Why encourage it though...

It probably will end up being taxed sometime in the future - the internet has only gotten more and more regulated since its inception, after all.

NO TAXATION WITHOUT MASTURBATION

I had a money plant before, but it pales in comparison with the one growing gold bars in the picture above. 

does posting an inane comment on a gaming website each day for a credit bump me into a new tax bracket?

commnt

interesting.

eh

eh

Can you imagine making a living to actually obsessively play games like this? I can think of about ten young people who would instantly become extremely elligble bachelors (And bachelorettes) overnight. You know, when bathing becomes passe.

i just can't imagine the tax income would be worth the effort to legislate it.

who

would inforce the taxing on people that ive in different countries is that enforceable?

Woo slave labor

"In its  National Taxpayer Advocate's 2008 Annual Report to Congress, the Internal Revenue Service expressed concern that virtual worlds are a growing source of tax noncompliance...but currently has no laws to deny or tax the sale of one type of economy for the other."

 

That may be true but higly misleading. There are wide sweaping laws to lax INCOME and I see no reason why the IRS should have the power to deny games from having their own ingame curancy. All these non-rules are in there to create the illusion that the IRS has no ability to collect taxes from those selling x for RL currency. If you reside in the US (and in some cases even if you do not) and if you accept RL currency for items virtual or otherwise you owe taxes. In some cases even if you barted for it you might have to pay to the IRE taxes on 'market value'.

The taxes should be on the dollars not the gold pieces.

not everyone buys credits... so gold farming may not have a dollar equivalent even more if people from other countries with other currencies farm said gold

wat

wat

Huh

That would be crazy

No

No

I don't think it would.