Economy Update: Tax revisions coming – more money in most pockets!
We wanted to respond to discussions regarding the economy and share information regarding tax changes present in next week’s release. The tax changes will benefit most of the Second Life Residents but also makes certain types of content more expensive (which I’ll describe below).
First off, let me emphasize that the purpose of the Second Life economy is to fairly allocate resources among residents and create incentives for player-driven exchange. When I say "resources," I'm referring to the amount of land and number of objects in the world. Both of these can be thought of as finite natural resources, though the total resource pool will expand as more simulator machines and more land come online.
Second, let me acknowledge that the economy is a little tighter right now than we’d like it to be and are launching multiple experiments intended to address your concerns. Some of the contributing factors to this tightness are: relatively small size of the world, tendency for early economies to possess less peer-to-peer exchange and the current taxation structure.
You’ll note we’ve already made changes to the stipends which lessen payout to members who are not logging in and participating on a consistent basis. Upcoming experiments include opportunities to earn more money via civic projects. We’ll go through these experiments together – some will works, other might now – but over time there will be fewer major changes in the economy and more balancing of existing mechanisms.
But for now, of immediate importance are the tax changes coming next week.
Object Taxes
Previous to this release, the taxation scheme for objects was that each shape received a fixed charge of L$3/week regardless of size or position within the world.
With this release, the per shape charge will be variable, based on the size of the shape and its height above ground. Small objects or those near ground level will generally enjoy reduced taxes, while large objects or those high in the air will be taxed more.
For example, under the old scheme, a default shape created near the ground would be assessed L$3/week, whereas under the new plan, it would be assessed L$1/week. Similarly, a maximally scaled (10 meters) box raised to 20 meters above ground would be assessed L$3/week under the old scheme, but charged over L$30/week under the new plan.
The exact tuning of these numbers will likely change during the beta period. Most users will see a drop in their object taxes as a result of this change. Those with enormous towers or very large / high objects may see an increase. If you are maintaining objects of this type we’d suggest you evaluate whether or not it’s a good use of your Linden Dollars. If you chose to delete this type of content or bring it into your inventory, you of course will not be taxed. Also, given the way the tax assessor works, you will probably have a few days after the new release before the taxes truly become burdensome.
Residents will also be able to see the exact weekly tax an object will be charged by selecting/editing and looking in the general properties panel. Selecting multiple objects will display the total tax for all those objects. So it should be easy to check what your total taxes are for a given project.
The charges for lights will remain the same as before.
To my earlier point of using taxes as an allocation tool, the result of this change is that most people will be able to have many more objects in world, but castles in the sky are likely to be affordable to only a few. Our design goal is to encourage density but make objects which are highly visible (being both big and tall) more pricey to better match the aesthetic impact and computational expense associated with their existence.
Land Taxes
Land taxes now have a discount awarded for land located close to other land owners. The discount is based on the percentage of resident-owned land near the center of the chosen parcel, and can reach as high as 50% (this number will be subject to tuning during the beta). In other words, if you buy a plot which is completely surrounded by neighbors, it could be as much as 50% cheaper to buy and maintain than a plot sitting alone in the countryside. Additionally, the rate applies to your own plot as well, making it somewhat cheaper to buy one large plot versus several small ones scattered around.
The discount rate (for all property owners) will change dynamically as new residents move in, so you drop the taxes of your neighbors by moving in next to them, and vice-versa. This should make choosing neighbors fun - you make their taxes lower by living near them! Our design goal is to help people of like minds or interests own more land by creating neighborhoods together.