Battleangel

As mind-boggling as it sounds, Reuters just set up shop in some sort of virtual reality community called “Second Life.” Never heard of it and it sound a little girly, but the effort immediately paid off with an even stranger tale of how the US government is looking into virtual economies, taxation and property rights.

Booming virtual economies in online worlds such as Second Life and World of Warcraft have drawn the attention of a U.S. congressional committee, which is investigating how virtual assets and incomes should be taxed.

“Right now we’re at the preliminary stages of looking at the issue and what kind of public policy questions virtual economies raise — taxes, barter exchanges, property and wealth,” said Dan Miller, senior economist for the Joint Economic Committee. “You could argue that to a certain degree the law has fallen (behind) because you can have a virtual asset and virtual capital gains, but there’s no mechanism by which you’re taxed on this stuff,” he said.

The increasing size and public profile of virtual economies, the largest of which have millions of users and gross domestic products that rival those of small countries, have made them increasingly difficult for lawmakers and regulators to ignore.

Second Life seems to be the obvious problem since is has the ability to convert currency back and forth between U.S. dollars and its internal Linden dollars. Obviously, playing that sort of game in WoW will get you banned as I recall.