An L$ sink that works!

The removal of dwell is beginning to hurt my experience of SL more and more recently, and I've posted a rant/set of thoughts about it in the Economy Forums (here).

Anyway, it got me thinking, the reason dwell was removed was the lack of L$ to pay for it. The reason L$ are scare is because the L$ sinks aren't good enough, and the reason that the L$ sinks aren't good enough is that the most common ones are uploads, but these are a flat one-off fee. While listing in find and such do give some money back regularly, it's not enough.
And I wouldn't want uploads to become regular payments, that would be horrifying. Maybe increase them depending on the content as suggested elsewhere.

So what's the alternative?
Taxes.

I don't like the word, no-one likes the word, but hear me out please!

Basically it makes much more sense than the current system, as the current sinks are paying for services, but LL isn't providing (or at least charging for) enough services.
Taxes however can scale with the economy, and invisibly fetch in a LOT of cash without harming businesses much at all, who really have been getting a sweet deal thus far anyway!

The idea is simple, LL charges a small tax-rate on:
- Land sales
- Payments into an object
- Purchases of objects
- Purchases of passes into land parcels
- Purchases of group membership
- More if I've missed any obvious ones.

Payments from avatar to avatar are un-taxed as it's like handing over cash in real life, and a simpler mechanism than land-sales etc, which really ARE an LL provided services. This also wouldn't affect transactions to yourself (ie I pay money into my own vendor to test it).

The tax rate could be say, 1% as an example. So if I buy an object for L$100, the owner gets L$99, and LL gets L$1. Not a huge hit for the seller really is it? It would probably be rounded down as well, so that L$1 vendors are not broken (as many are used to provide 'free' content while still helping to support places).
On the SL-wide scale, this would be a lot of money going back into LL's coffers and which can be used to offset stipends, and bring back dwell!

Please do not discuss dwell removal itself here, that's maybe for the other thread (please read it btw, it has my thinking process behind this, though I must warn you, it is LONG).
Thoughts on this idea (taxes) are welcome, as well as a more suitable tax rate if you do like the idea!

The voting proposal can be found here (Proposal 1430)

This has already been hashed out.

It would kill gambling, banking, and things like tip jars. It would make refunds even less possible. And land is already taxed at ruinous rates.

I'm not sure how it would kill gambling really, money still goes into the machines, just with a small amount deducted as tax (when you get the confirmation pop-up it could say how much was taxed). The machine would only be able to give back what it actually received; ie for money(key id, integer amount), amount will be the value with tax deducted (except if the owner paid in as noted), so existing scripts won't break.

Similarly tip jars wouldn't be affected, if we assume a tax rate of 1% rounded DOWN, then measly tips wouldn't be affected at all as the amount is so small as to be untaxable.

Banking again, the money still goes in, but LL essentially takes a small tax as a fee for using their transaction services, in effect they are facilitating the bank's ability to transfer money in the first place.

Refunds are a bit iffy, however it depends how and when the tax is applied I suppose. The alternative is that accounts are charged tax periodically, say at midnight each day, based upon profit they've made. ie I receive L$2000, and spend L$1000 in a day, then it would tax me L$10 that night or 24 hours after the money came in or something.
That way refunds can still be given (within 24 hours or whatever amount of time, maybe longer), but taxes are still collected?

I dunno, it's another possibility, but as it is irl all things you buy are taxed (being paid for a job is technically the employer buying your services). If you need to give refunds then you do it using untaxed money you received, and people should be careful what they do with their L$ anyway, the number of refunds that 'need' to be given should be fairly rare, like irl.

The system must work if it's used by actual governments, the only hurdle is getting past the mindset that because you aren't taxed now, you should never be taxed, even if it's for the good of the entire virtual world.

Again, for the elevnty billionth time, you cannot control money supply or and economy with sinks only with influx and anticipations of throttled influx.

The only people concerned with the value of the Linden are content providers who are getting less and less US$ for their work. So your proposal aims to tax them and take away even more of that diminishing income ? You didn't think this through did you ?



Setting aside the "econo-speak", what people want is more consumers spending more US$ on currency as this is the only source of RL income for content providers exchanging the L$ they earn on Lindex. Got it ?

people won't buy L$ to pay into artificial sinks and giving stipends with one hand and taking them with the other is pointless.

(I should add that I've never cashed out a single L$ from SL)

Thankyou! Couldn't of said it better myself!

I think that L$ bought and sold for US$ wouldn't be taxable by the player that bought it. After all, LindeX already takes 30 cent cut from one end and a 1% cut from the other.
However, if I buy L$10,000 and go off and buy content, the people I bought it from could have that incom taxed.
LindeX transfers would be just like P2P gifts, only US cash is exchanged outside of SL (through LL and they do tax it there).

How about buying L$ to pay into services (uploads, group creation, advertising, etc...)?

How about creating new services out of things that people have asked for in the past but LL doesn't consider worthwhile implementing?

* Name changes.
* Parcel basements.
* Parcel ground texture control.
* Extended security options.

Name change... L$7500

Parcel basement (underground area only accessible by a landowner script)... L$1 per square meter, plus L$500/month maintainance fee.

Parcel textures... L$1 per square meter per change.

Extended security... L$1 per 512 cubic meters per month, starting above the current 40m zone, or starting at an arbitrary altitude for skyboxes.

Or adding $L5 for each additional (x,y)128 of a texture so 512x128 would be 10(upload up to 128 by 128 pixels)+15=$L25. Basically, charge more per upload for better quality textures.
A skybox can be up to 6 textures so custom parcel and sim backgrounds at 512x512 and up would cost a pretty penny (at least $L50 per tile).

Remember, no matter what the size, it's all being stored at the Linden's house!

- Jolan

Erm, isn't the diminishing income because of the instability of the economy, which is because the L$ sinks aren't covering the L$ being created.
With a stabilised economy prices might at least remain a bit steadier so content providers can make a steady profit with a small tax deducted (I'm talking 1-5% here, if you're selling things at a profit margin of less than that then is what you're selling really worth it?!), rather than having no tax deducted and seeing the L$ value go crazy.

What I'm after is to get LL to put back the things that make this a GAME rather than a tedium of economics. Taking away dwell makes it harder for new players to enjoy themselves, taking away dwell makes it harder, if not impossible for many free places to sustain themselves with. Without new players, or fun, free places, SL isn't a game anymore!

A sensible tax rate that brings in more L$ than are created helps to balance the system, and as I say even a small tax ought to fetch in a considerable amount as we're talking about being able to tax everyone, no tax evasion or whatever.
Since it should bring in more than is needed, it also means dwell can come back to balance it perfectly, the excess from tax is turned into dwell to keep popular places alive.



As Draco18s pointed out, there would be no sense to taxing bought L$, since you buy them from LL anyway, why tax themselves? Besides, the USD$ -> L$ rate is variable anyway based on the performance of the L$.
Every L$ you buy goes towards things you want to buy, it's the people who are selling that have the tax deducted, but they still get money.

Ultimately this is better for people who buy their L$ with USD$, as with a more stable L$ rate you're at least guaranteeing that what you pay for is still worth the same in a week or two's time.

Sales tax would kill a lot of things but if this was implimented as your 2nd idea, a capital gains tax, then i would be all for it.

It would need calculated on stipend paydays. It would also only take into account your overall profit/loss. The methods i think should be used when totalling EXPENSES are:

1. anything spent with the BUY option by right click -> buy on an object for sale in-world.
2. anything spent with the PAY option on a scripted object.
3. anything given from your account via llGiveMoney() in a scripted object you own.
4. any money spent on upload fees.
5. any money spent on ratings.

methods of spending that should NOT count as an expense

1. using the PAY button in an avatars profile. You should not benifit from gifts.
2. using the pay option via directly right clicking an avatar. -see #1 above-

I choose these because the top 5 things because they are all legitimate expenses involved in the games overall economy. Direct payments to a friend (transfers in general) is not a economic transaction, just a personal one. Since some businesses use automated payments for employees they should have those paychecks count as legitimate deductions and reduce their overall tax liability. That is why i list llGiveMoney() in the valid deductions section.

Methods that i think should count against you as income that potentially causes taxation:

1. any money recieved from object sales using BUY option.
2. any money recieved by people using PAY that is recieved in a money() script event.
3. any money recieved from results of llGiveMoney() by another owners object.

Methods that should not be held against you.

1. any money recieved from PAY button in your profile or pay option in pie menu.

This means any sales you recieve, any gambling earnings and any tips earned via tipjars (all effort based income) is what is taxable. It also means you do not have gifts (direct pay) held against you. Loaning or giving a friend money should not help or harm anyone except on a personal level.

Finally the LindeX has its own fees. Someone who sells a massive ammount of content, and then sells their lindens on the market are STILL COMPLETELY LIABLE for all capital gains taxes. Anyone selling $L on the market needs to keep enough on-hand to pay any taxes. Anyone purchasing $L from the market is contributing REAL WORLD dollars to a content creator and should not have to pay in world taxes on it. Let the GAME TAXES be effectly strictly by things that happen IN GAME. Keep the stupid 'real life' economics out of game taxation.

The only opinion on these issues I care for are the original posters. Please provide feedback if our two views on this subject are compatible.


EDIT:


Now if someones expenses in the world happen to be higher than their income (because they solely purchase lindens from the LindeX) I think these individuals SHOULD AT SAME TIME be paid a capital-loss dividend at the same rate that others pay capital gains. The percentage should be EXACTLY the same.

This tiny addition would mean basic account holders, who no longer recieve a gaurenteed stipend, that are ACTUALLY contributing real dollars to the economy, thus contributing their LindeX fees to LL, and that are obviously valued customers in every regard, would recieve a small reward. This feature should be considered seperate from the rest of this thread unless the O.P. thinks its a good addition.

The capital gains reward I think would create a L$ source equal to the L$ sink that the capital gains tax creates.
Think about it, if someone buys L$1000 on LindX and gets a 1% bonus because they spend it all (L$10) and the people they paid that L$1000 to have a 1% tax (totals L$10) then where's the sink?

Seronis that sounds good apart from what Draco18s pointed out, I think that not having your Lindex purchases taxed would be reward enough. I hadn't thought about cashing L$ out of the system though, that's a good point as it closes a potential exploit as well.

As for people running a loss, the original idea for the second suggested implementation (tax overall profit at regular intervals) was simply that if you have made no profit, you wouldn't get taxed, this not only simplifies calculation but means if you're running losses you aren't going to suffer even more than you already are, sure some people might deserve it for being silly, but this is meant to be a game
Anyway, one interesting effect of this is that if you pay all your money into a bank before you get taxed, the bank will be the one taxed for it, since in order to give up cash (in order to run at a loss in the first place) you'd have to send it somewhere! So long as the tax rate is constant (rather than getting bigger for higher earners as some governments do) this would still work since taxes wouldn't fluctuate as a result.

Points acknowledge. To make it balance out as a more gaurenteed money sink go ahead and allow normal PAY actions to count against the reciever as taxable income and the capital loss dividend would need to be half the rate of the capital gains tax. Then again I dont really care if a capital loss dividend is even part of the equation. I only suggested it as a counter-measure to LL ( in my humble opinion ) moronic choice to remove new basic stipends and the starting cash.

[RANT]for gods sake give ALL BASIC accounts $500 starting $L and 2 months of stipends and remove ALL BASIC accounts stipends after the first 2 months. Yes this means mine. I dont care about my stipend but economically new players NEED that starter cash to get a feel for THIS GAME.[/RANT]

Haravikk, btw this is the best idea i've seen in these forums along side the Fines for Fines thread. About the bank though i dont see banks as having any effect except for putting off a fee till later. Eventually for that money in the bank to have any VALUE you have to withdraw it, at which point you will have a capital gains for that week and the bank a capital loss. If you factor in my tweak above about either removing my suggested 'loss' or just cutting it in half then neither side can 'game' the feature. Merely postpone the inevitable.

Hmm, just realized i didnt have a vote for this. Ok got one now (along-side Torley day, my push and sinks items, the Fines proposal and voting enhancements). Everyone vote for Torley day !

Bump. This needs hundreds more votes.

bump