If you ever want to start an article with a great quote, Mark Twain is the GOAT.
“The only difference between a tax man and a taxidermist is that the taxidermist leaves the skin.”
The tax man can be offensive, so I flirted with the idea of calling it the Tax Human, but I read recently there are some people that identify as non-human, known as otherkin. Therefore, I am going to settle on Tax Being for the rest of this article.
My kids are a part of the million and a half children in the UK alone who are regular users of the creative gaming platform Roblox, and there are 100 million active players every month (almost as many subscribers as PewDiePie). Roblox is not a single game, but rather a collection of more than 50 million games, all created by its community of players.
The best comparison I read is to YouTube: a library of “user-generated content”, but in this case the content is games, rather than videos.
Millions of kids every day spend their time living in this other world, creating and hanging out in digital realities. Ambitious youngsters can build complex games and even start to make money through taking a cut of in-game purchases using Roblox’s virtual currency, Robux. The company paid out more than $100m in 2020 alone to them!
The metaverse is already here.
I listened to Elon Musk on a Lex Fridman’s podcast recently and Lex asked the Tesla and SpaceX chief a cheeky question: will Dogecoin be the currency on Mars?
For those of you who haven’t ventured into the death-defying world of crypto, Dogecoin is a crypto currency that started off as a joke (literally), until Musk backed it and it magically transformed into a legit coin (which perfectly captures the crypto culture). Recently, Tesla announced that despite selling most of its Bitcoin, it still holds all its DOGE.
Instead of taking the question in the jokey spirit in which it was meant, Musk paused for an awkwardly long time while he mused over his answer, finally responding: No, it can’t be, because Doge’s Earth blockchain won’t be able to connect to Mars’ blockchain in real-time, so it will need its own independent blockchain.
So here’s my question for Elon: who will be the Tax Being on Mars? There’s no doubt it will have to be a Martian, because no respectable Martian will allow some Earthling to tax him or her or them. (Mars will adopt all our pronouns). A more serious question: who will be the Tax Being for the metaverse?
The future of cryptocurrency is in jeopardy because the tax beings of nation-states like the USA and China are clamping down and taxing crypto. Most businesses have stayed away from Bitcoin, but several are busily selling non-fungible tokens (NFTs), unique pieces of digital data registered and stored in a blockchain. I read that Nike is one of several brands selling through Roblox, and it raised eyebrows last year when, during six lucrative minutes in the virtual realm Nikeland, it sold 600 pairs of NFT sneakers for a total of $3.1 million.
I wonder if Nike paid any tax on this revenue?
I have some ideas on this, which I might share in the future, but there is no doubt in my mind that the future of taxation will be on the blockchain. Unfortunately, for now, the earthly tax beings still own us – so if you make money on the internet in any form – make sure you know who you owe tax, because every tax office in the world has an army of soldiers crawling the internet, looking for online businesses who haven’t paid their stipend.
We all know what they say about death and taxes, but death doesn’t get worse every time a government needs more money.