This article has been republished with permission from Binance News.
According to Cointelegraph, Harvard legal scholar and Yeshiva University law professor Christine Kim has published a research paper arguing for the taxation of the metaverse and treating it as a laboratory for experimenting with cutting-edge policy. In the paper titled ‘Taxing the Metaverse,’ Kim states that the metaverse allows participants to create and build wealth entirely within its ecosystem, which should be regulated under tax code.
Kim explains that the metaverse’s ability to record all digital activity and track individual wealth means that governments can track and tax income immediately upon receipt, potentially shaking up the status quo of U.S. tax law. She recommends changes to how taxes are realized, suggesting that taxation should occur immediately upon receiving gains, including unrealized gains and income, even if they remain in the metaverse.
Enforcement of tax law in the metaverse could involve individual platforms withholding taxes on behalf of users or, less preferably, platforms sending tax information to users who would then file and pay their own tax obligations. Kim also argues that taxing the metaverse presents further opportunities for lawmakers, as it can be a laboratory for experimenting and simulating scenarios that are unlikely to ever occur in the physical world.