Sinks and taxes

Excuse me if this is really stupid. I have no idea about economics really..

I have noticed the concern everyone has about the devaluing L$ and how this will lead to inflation (not sure I have seen too many prices increasing yet, but it only has to be a matter of time). I must say, I do not know of a healthy economy where there is not inflation, but I take people's point that inflation may be going a bit too fast in SL. One point, which makes L$ very unlike other currency as I see it, is that it is only traded against the USD, a pretty weak currency itself at the moment on the global markets. I am not really sure how this affects things though. I would appreciate peoples thoughts on this matter.

The other thing, about the devaluing L$, due to excessive input and not enough sinks (as I am led to believe), could probably be fixed by a simple implementation of sales tax by LL. Say a 1% fee to LL on every in game L$ transaction would be a massive sink I would say (and a significantly lower sales tax than any RL economy AFAIK). Even if this did stabilise the price of the L$ against the USD, would this be a good thing though? Would the economy stagnate as a result?

I do not believe that your idea, even if accepted, would not currently work on EACH sale...the reason being that you would go into % of L$. Remember there are not any L cents. You would have percentages of a L$ where there is no method of keeping track of that as far as I know. In other words there are not L $ 1.50.

Well I guess they would round it down to the nearest L$, so stuff for less than L$ 100 would be tax free.. but I was really more interested in how people think this would affect the stability of the currency.

Wouldn't work. Youd end up killign games with pots since they use the 'pay' function.

Persons a b and c put 100 lindens into a greedy pot.

taxes kick in

297 are in the pot

game runs, a winner comes up

Owner takes a 5% cut

Rounded up, owner takes 15 lindens

sales tax kicks in, its down to 14 (function of pay)

Winner gets remaining 282 lindens

take kicks in (function of pay)

Winner gets 279 lindens after tax

increase amounts for bigger pots..mor eplayers..bigger rakes..

owners and players get screwed because you put a tax on a FUNCTION

increase the tax and it gets worse...

A small tax on land purchases may work. Similar to "stamp duty".

A 1% tax on a L$50,000 property will destroy L$500; barely noticable for the purchaser, and one stipend burnt.

Musuko.

I think there should a player to player auction system for land sales with a small % fee in lindens as a sink.

That I can see. Its not attached to a function used in alot of games.

I like that idea. I think that There does something like this already.

I think you missed the second point that taxes would be rounded down so:



OK.



Would not be taxed. (tax rounded down).



Would actually be 280 lindens (tax rounded down)



Total tax for the above would be L$5. Still an almost unnoticable amount I would say.

I agree it is somewhat annoying that the tax is taken for money into the pot and money out, but it might be possible to set games so that money to the game object or from it are not counted as transactions.. not sure.

If people put L$99 or less into the pot, the transaction would not be taxed. This could lead to gaming the system, but I would suggest that this would not be a real problem. Particularly if gaming (i.e. paying 500xL$99) was made a bannable offense.

Also, 1% was the first number that came into my head, 0.5% or 0.25% may be more appropriate, and if rounded down would only affect larger transactions (L$200 or L$400 respectively).

"Particularly if gaming (i.e. paying 500xL$99) was made a bannable offense."

And how do you suggest such a "crime" be monitored?

Musuko.

Well, if records are kept of who transactions are between, (I am sure that LL have such a database for accounting purposes) it would be trivial to run a search for multiple small one-way transactions between two avis over a period of a day. This could be flagged up and investigated.

I am not sure that a heavy handed approach to this would be too helpful though.

Really, I am not interested in the nuts and bolts of how such a tax would be implemented: there are hundreds of ways it could work. What I would really like to know is how people think this would affect the economy.

Also, my other question about trading vs other currencies apart from USD has not been touched on yet. Anyone have any thoughts?

Except your goal is to tax SALES not GAMES.

And very noticable when we have players who win an 8 player 150 L buy in game complaining about ANY rake.

Also, assuming you work out a way to make games 'untaxable.' Imagine now rigged gamed with pots requiring say..550L buy in, but the player (the rigged loser) gets the 550L item.

Same as buying only skippign the taxes..

Sales tax on items would be a good idea if it could be implemented. The problem of course is implementation. Although, maybe it could be done with the 'For Sale' button on objects only?

Land Sales is a good idea. Taxing land sales would be a valid money sink. We're already paying a usage tax (although we're paying it in US$, not L$). It would make land more expensive, and would make land trading and land flipping less desirable.

Paying land taxes in L$ doesn't work because the only way LL gets their cash is to sell those L$ back into the economy.

Well I just called it "sales tax" to give people an idea of what I meant.



Well.. I am sure you are right.. If the blanket tax on money transfers was at 0.5% this would mean none of the deposits to the pot were taxed, and the jackpot would be taxed $L6 (out of L$1200, assuming no host-rake) which I would say is really insignificant. Yes people would complain, but I don't think it would stop them playing.



Yes.. could be a problem. I would say the tax would still have to apply in one direction, even with game objects though: i.e. tax on payment of jackpot.

These kind of tax loopholes are common in all economies though AFAIK.

Just for fun, I tried some calculations.

A cross the board 0.5% tax on all transactions (rounded down) would only burn between 3million and 19million. L$ per month. This is not enough to balance the stipends (49million). A 2% tax on transactions over 1000L$ would make between 12million and 56.5million, which seems closer to what is required, but I guess this sort of taxation would not be popular. Would certainly bite into profits, but perhaps if the linden was more stable against the dollar, it might be worth it to vendors..

The nice thing about taxation, rather than cutting stipends (as I see it) is that it keeps money moving. If people do not get their stipends, they are likely to just make do with what they have already got.. It requires an extra step for them to go out and put more money into lindex, which may put many people off..

With stipends, although they are paid for, and have a real value, once they are credited to peoples accounts, I think they feel obliged to spend them in game (for the most part). This certainly helps vendors and keeps the economy moving..