Virtual economies and tax scamming

Some speculation today (Scientific American) about the tax implications of owning liquid virtual assets. The one thing that seems almost certain here is that if legislators try to tax virtual assets they will simply be opening the door to some fascinating tax scams. Here's my first attempt at a basic virtual economic scam.

Set up a virtual world. Set a level limit of, oh, 60. Allow players to buy and sell avatars from within that virtual world on eBay. Assume the level 60 avatars command a value of $405. Create such a level 60 avatar (you're the game designer, remember) with a demonstrable market value of $405. Walk him off a cliff. Write off $405 in lost assets. Repeat until tax bill is zero. Discuss.

Comments

[Geoff]

Only problem is in the creation of the character, you raise your assets by $405. So then by deleting the character you're dropping it by the $405 you created when you made the character. Essentially, you're doing nothing at all other than wasting time. End of discussion.