My hubby gets this, and the special report this week is on video games and gaming in general. Interesting reading.

In it, they quote LOTRO as tripling its revenue stream with F2P:

http://www.economist.com/node/21541163

Print edition article list here: http://www.economist.com/printedition/2011-12-10

eh, I think for the most part taxing would be easy. Turbine could just add a sales tax to the point bundles.

Every point that was generated then sold afterwards would have been taxed. The point then leaves the system when it's redeemed. Points that don't leave the system because of being traded in game aren't much different than cash I use to give my kid her allowance.

As far as player cash for player goods is concerned it's not much different than buying at a swap meet or other under the table ventures for the smaller uses. Sellers that farm and turn over a large number of items might have to go through ebay, if not banned, and isn't ebay getting ready to start taxing. Or I guess it'd be paypal at that point.

I'm more interested in building wealth in the game and what that could mean. Specifically the South Korean example of allowing in game currency to freely convert for real world money as long as it was earned by skill and not luck. How would that effect the basic random chance of something like a The Blood Stone, a LDS, FRDS, or eSoS Scroll? Big ticket items that are all luck and grind to get with luck being the determining factor.

And if someone got perma banned while they had 20, 40, 100 LDS or FRDS since they're pretty much the endgame currency (or so I've heard) are they entitled to a refund?

Actually read the article (the whole one on gaming) on my way to work this morning, quite well written and interesting. 
JoJI wrote on Dec 14^th, 2011 at 11:06pm:
I think the part of the article you are talking about was referring to an income tax not a sales tax.  This would be on games like D3 and (Ithink) Eve online where its not against the ToS to trade ingame items for money.  The major issue here would be everything else that goes along with the income tax.

ie investment deductions.  what is my time worth, which can be written off if I was a business as an input into the profit.  Losses can also be written off into the future.  The IRS is already overwhelmed by just the Income tax in the US, adding the type of variables (and the ability to claim one thing, and have to prove it) that such a fluid video game system would provide would be very difficult.  They are having a hard enough time with the constitutionally of requiring online businesses to collect sales taxes based on point of sale, that going thought with an income tax or even sales tax ingame will be a long way away.

More over, the video game industry is quite large and will strongly lobby against it.  Consider the issues that a perma ban would raise.  Without a court it could fly in the face of the constitutions ('illegal taking clause').  Let alone glitches such as ingredient bags diapering.  The incentive to move off shore would be huge.

But never write off the ability of politicians to get their hands on your money.

Hafeal wrote on Dec 15^th, 2011 at 5:28pm:

Much more then this when you consider many municipalities across the country use the sales tax to grab your money too.  There are literately thousands of sales tax laws across the US alone.  Granted this is pretty simple to get around.  Each purchase typically has a zip code associated with it, and it would not take to much for a company to compile a list and keep it updated, then sell it as a product.

Bet the leaders would love that, gov't inefficiency would create jobs, which is all we care about right?