Why Is No One Complaining About the Sales Tax?

[Prokofy Neva]

2 minutes ago, Marianne Little said:

I would rather have a raise in the rental cost, than pay tier to LL with 25% VAT added on it. It is no way you will raise the rent with 25%, is it?

If you say somewhere that you will raise the rent, I did not see it. I am sorry if I missed it.

A careful increase in the rent, to see how it rolls with the tenants, is something you should consider and test out. Maybe even set different prices, like the best areas get a rise? It is how it works in RL. Desirable land cost more.

Maybe you can't take up all the taxes in rent, but a part of it. Of course somebody will leave in a hissyfit, but maybe they were already thinking about leaving.

I believe Mainland is the cheaper rent already, and people are willing to pay more for rentals like Fruit Islands.

I wouldn't raise the rent, no -- that's just not an option. Look at the land market, which is the worst it has ever been in SL, where land sells for 0.2/m -- which means that it becomes less than the cost of abandoned land purchased from the Lindens at a fixed price of $1/m. When land *sales* are so devalued, rentals -- which might seem unrelated -- become devalued as well because people can buy very cheap land, dump it when they don't feel like paying for the premium, pick up the premium again and get a Linden home, etc. There's no incentive to rent. Not that anyone is required to ensure that -- the artificial economy of SL is artificial, and maybe this is the lasting lesson of SL. Perhaps it can't succeed, and it races to the bottom always due to the fixed price of abandoned land and the essentially fixed price of the Linden dollar -- plus the inflation of the Linden stipends.

In RL, in the tri-state area where I live, COVID rent forbearances are ending or ended; COVID electricity and phone forbearances linger on but will be ended soon enough. There is all this talk about the "great resignation" but that means in fact some people quit jobs and don't seek new ones, or go on welfare or Social Security early, or work part-time -- and that's when they cut back on SL.

Gas prices have jumped due to Russia's war on Ukraine -- and people feel that pinch at the pump and then are reluctant to spend more on entertainment. Which is SL.

You couldn't possibly soak a discount Mainland rentals business for a figure like US $250-300 per month. There truly is nowhere to put it. Already with the war in Ukraine and the end of COVID pogey, I saw move-outs and people withdrawing tier donations. It's not now a factor like "their Christmas credit card bills hit" -- that's something for early February. No, now it's another factor, which is RL economic conditions. 

But quite possibly, a business like the Fruit Islands which enjoys bulk discount, can raise the prices uniformly across 100 sims or 500 sims by some reasonable amount and pick up the slack for themselves. But if you have 25L skyboxes and 150L cabins, that isn't as possible. And so the moral of the story may be that there is no room for small business in virtual worlds; there are only economies of scale.

The artifices of the virtual economy, driven as they are by company policy (the gatcha ban) or RL (COVID, which actually meant lower income for many people, even if it meant more time to be online), mean that quite possibly, it will never be able to sustain a tide that lifts all boats. It will likely be a tide that only lifts the boats of those who can afford large numbers of regions or with high coding or graphics skills -- the Renaissance Fair. But that was the hope for online business, including from virtual worlds, that it would be an economic boon especially for the poor world. I was relieved that a Ukrainian woman I have bought things from on Etsy -- who closed her shop as her city was literally bombed and she had to flee into the metro for shelter -- was able to open up her shop again and even get packages mailed, with some struggle. Even so, the day when virtuality replaces reality is not so near.

[Marianne Little]

As one who pay VAT, buying Mainland and pay tier to LL is out of the question. Simply no. Or else I have to put in 4 Premium accounts in one go, almost 400 US out in one go. That is ouch. I do not notice smaller amounts out. But 25% is not small.

In addition comes the cost of purchasing the land. That is at least 50 K for 4098 m land by water. Probably more.

I rent 4098 m for 998 L per week, and I would take a raise to 1000 without a blink. Maybe notice 1005, but understand it is because of taxes.

Believe me, as one who pay 22% of income, 8% on top of it for national Insurance contributions, taxes on savings, takes on property and crazy high ones on everything from food to candy, alcohol and tobacco, I know that you will have to cover your taxes some way.

[Mollymews]

i think the response to the US taxes has been muted for the reason that Linden has been passing on the VAT cost to europeans for quite some time, and more recently GST to australians. So the feeling from some (if not many) US people is oh! well, was good while it lasted

 

given the tax doesn't apply to L$ purchase, only to tier and premium, i think it might have some effect on US people switching from mainland tier ownership to renting

as some european posters (subject to VAT) have mentioned , they switched from paying tier to renting mainland

i dunno tho how many US people do rent mainland now, or might switch to renting for it to make any substantial difference to any one landlord when viewing landlords individually

Edited April 13, 2022 by Mollymews
have

[Kathlen Onyx]

5 hours ago, Prokofy Neva said:

I'll try explaining one more time. My complaint is not THAT there is a tax -- which as I noted, is legitimate and necessary. My complaint isn't to Linden Lab or to my state, which I wouldn't expect to influence on this arcane manner although some have generally fought the Internet taxation.

Rather, my question is why is no one complaining about how it is done, and how they have taken a hit from it. No one is saying "I have to downsize" or "my business is now slower because all these people have to pay this tax now". 

So then I ask questions: why? Has it affected people so differently? Do they really all live in Alaska or Kentucky, or did they in fact already address this 10 years ago in the EU with VAT? What's the story?

So you're going on about why a tax is legitimate -- that I said from the outset was legitimate -- read what I wrote, not what you think I wrote. My complaint isn't "to Linden Lab" -- again because it's more a query about why no one is articulating that they feel this pain. I asked it briefly at the end of the Concierge meeting and also found no one cared.

So see if you can get past your need to lecture me about where I should be complaining about the tax per se, and try to ask why more people aren't expressing that it affects them, and complaining about *the effect*, *not the tax".

Can you be any more rude? You start a topic and ask a question and when people don't answer it "to your satisfaction" you get all pissy and start talking down to people.  You are wanting an in-depth discussion on something that literally has just happened. 95% of SL doesn't even know about it and haven't even had to pay it yet.  

[Marianne Little]

5 hours ago, Prokofy Neva said:

So what you're saying is that there are people who don't read the Linden blogs, and don't read the forums, and when they see that their $175 Mainland Sim, or their $229 island, now has a tax of (in New York City at least) US $15.31 or $20.03, only then will they howl and say what's this???

 

I think she is correct. Give it a month more and see...

Maybe people will cope by leaving their sim or island and rent instead? As long as it is no taxes on buying Linden Dollars.

Buying Linden Dollars inworld and pay the landlord, could be replaced by paying directly from my PayPal to a landlords PayPal? What is the laws there? Who pay taxes on that? No one? Both?

[Prokofy Neva]

26 minutes ago, Marianne Little said:

I think she is correct. Give it a month more and see...

Maybe people will cope by leaving their sim or island and rent instead? As long as it is no taxes on buying Linden Dollars.

Buying Linden Dollars inworld and pay the landlord, could be replaced by paying directly from my PayPal to a landlords PayPal? What is the laws there? Who pay taxes on that? No one? Both?

That wouldn't be advisable because you have to report income received by PayPal. I always do. Regardless of whether you are issued a 1099 for it, or whether it is in the US or from a foreign country. You still have to report it and pay taxes on it. So in that sense, an inworld transaction -- which the IRS or states haven't reached out their hands for yet -- is better.

The idea that Europeans all switched to renting Mainland after VAT doesn't track for me. For one, they could just as easily rent -- and not buy and pay tier on -- islands. But I see Europeans happily buying multiple islands and homesteads as well as renting. I think it depends more on the income level of the individual and the general wealth of their given country than on the VAT or absence of VAT. And the fact is, we don't have the statistics. We don't know how many Europeans or Asians or people of any group are in SL. There isn't a breakdown we are privy to, by country. We don't know their spending levels, either.

[Ingrid Ingersoll]

You have to die at some point, and you have to pay taxes.

I guess I could all write a strongly worded letter to my member of parliament. 

[Marianne Little]

2 hours ago, Prokofy Neva said:

That wouldn't be advisable because you have to report income received by PayPal. I always do. Regardless of whether you are issued a 1099 for it, or whether it is in the US or from a foreign country. You still have to report it and pay taxes on it. So in that sense, an inworld transaction -- which the IRS or states haven't reached out their hands for yet -- is better.

The idea that Europeans all switched to renting Mainland after VAT doesn't track for me. For one, they could just as easily rent -- and not buy and pay tier on -- islands. But I see Europeans happily buying multiple islands and homesteads as well as renting. I think it depends more on the income level of the individual and the general wealth of their given country than on the VAT or absence of VAT. And the fact is, we don't have the statistics. We don't know how many Europeans or Asians or people of any group are in SL. There isn't a breakdown we are privy to, by country. We don't know their spending levels, either.

No, I don't say that all Europeans switched to renting. It is lots of Europeans with a high income. I am more the frugal kind, and looking for the most Li for the money on my budget. I am sure some pay for regions and homesteads in plural... and that some will not spend money on land at all. Anything goes.

I know at least one estate owner that takes payment via an account outside of SL. If he don't report it, or if he pay taxes, is not my idea to ask about.

I wonder of one thing: Why are you so set against increasing rent for your tenants? It is a kind thing you do for them, but are you not a bit too kind?

[LittleMe Jewell]

8 hours ago, Prokofy Neva said:

I'm not getting your "$7.50". Is that per year or what?

Yes - I pay my Premium yearly and at a tax rate of 7.5%, it will cost me an additional $7.50 when they take the money this coming June.  So my $99 will become $106.50.

[Coffee Pancake]

59 minutes ago, Ingrid Ingersoll said:

You have to die at some point, and you have to pay taxes.

I guess I could all write a strongly worded letter to my member of parliament. 

Yeah, especially about the death thing, that really sucks.

[Marianne Little]

12 minutes ago, Coffee Pancake said:

Yeah, especially about the death thing, that really sucks.

I would only live for ever if we stopped aging at 30!

[Cali Souther]

There was another thread on here, and a few of us complained, for a minute...   

No use going on about something that, is what it is.

I'll continue to spend as much as I can afford on my Second Life, because I enjoy it.  

 

[Prokofy Neva]

3 hours ago, Marianne Little said:

No, I don't say that all Europeans switched to renting. It is lots of Europeans with a high income. I am more the frugal kind, and looking for the most Li for the money on my budget. I am sure some pay for regions and homesteads in plural... and that some will not spend money on land at all. Anything goes.

I know at least one estate owner that takes payment via an account outside of SL. If he don't report it, or if he pay taxes, is not my idea to ask about.

I wonder of one thing: Why are you so set against increasing rent for your tenants? It is a kind thing you do for them, but are you not a bit too kind?

The advantage of reporting your PayPal income such as from SL or any online business activity is that then you can submit the business expenses such as Paypal fees, sales taxes, )now that we have them) computer repair, a portion of your phone/Internet bill, etc. So ultimately it makes sense unless your business is very small and you just spend the proceeds on tier and content inworld.

It's not that I am some sort of virtuous philanthropist; I don't charge higher rents because tenants then move out, because they can find another rental by someone who either has lower costs or who doesn't mind not reimbursing themselves at least at a break-even rate, let alone make a profit. The difference between 0.66/prim and 0.70/prim can make or break a rental, depending on the area, the view etc. Someone re-renting homesteads can afford to raise prices -- but I couldn't do that even on my one homestead because I'm in a market where other people do not charge even the tier they themselves pay.

 

[MoiraKathleen]

I am not making any changes in SL due to the addition of sales tax (which in my city is 9%).  If I have to pay it, it will only add $0.63 to my monthly tier bill, and it will add $8.91 to the cost for an annualized premium account charge 3 times a year (3 premium accounts due at different times of the year).  I haven't reached any of the due dates yet, so I don't know for sure how the description of the services being billed fall under the California State tax regulations.  

 

[Persephone Emerald]

The addition of sales tax to the purchase of tier, Premium subscriptions, and probably soon linden dollar purchases has affected me very little because 1.) my 2 Premium subscriptions are not due to renew yet, 2.) I dropped an additional $L 4/ month in tier, sold my mainland and moved to 2 Linden Homes instead, and 3.) I very seldom purchase linden dollars but rather use my accumulated stipend and proceeds from the recent sale of my land to buy stuff in SL.

Paying a bit of sales tax is such a relatively small problem for me that there is no need for me to complain about it, especially since most non-US users have been paying VAT while we in the US didn't have to pay state and local sales taxes.

[Eowyn Southmoor]

My personal answer to the question in the thread title is simple "because I already have been paying sales tax for years in SL"  

I've paid my country's sales tax on my premium account and tier since the moment I went premium approx 5 years ago, and am assuming that many people in SL who live outside of America have done likewise for years.

I also rented land on mainland until recently, when the rental group decided they would increase their prices. Clearly they felt that the best way to deal with this new sales tax was to make their customers pay for it - customers who, in some cases, already are paying sales tax.  My response to this was simple, I left, and judging by how many of their other rental parcels are suddenly empty, seems like I wasn't the only one 

[beethros Karas]

Member state	Country code	Super reduced	Reduced rate	Normal rate
Austria	AT		10%, 13%	20%
Belgium	BE		6%, 12%	21%
Bulgaria	BG		9%	20%
Croatia	HR		5%, 13%	25%
Cyprus	CY		5%, 9%	19%
Czech Republic	CZ		10%, 15%	21%
Denmark	DK			25%
Estonia	EE		9%	20%
Finland	FI		10%, 14%	24%
France	FR	2,1%	5,5%, 10%	20%
Germany	DE		7%	19%
Greece	EL		6%, 13%	24%
Hungary	HU		5%, 18%	27%
Ireland	IE	4,8%	9%, 13,5%	23%
Italy	IT	4,8%	5%, 10%	22%
Latvia	LV		5%, 12%	21%
Lithuania	LT		5%, 9%	21%
Luxembourg	LU	3%	8%	17%
Malta	MT		5%, 7%	18%
Netherlands	NL		9%	21%
Poland	PL		5%, 8%	23%
Portugal	PT		6%, 13%	23%
Romania	RO		5%, 9%	19%
Slovakia	SK		10%	20%
Slovenia	SI		5%, 9,5%	22%
Spain	ES	4%	10%	21%
Sweden	SE		6%, 12%	25%
United Kingdom	UK		5%	20%

The Member State with the lowest VAT rate is Luxembourg with a common law rate of 17%.

Hungary is the Member State applying the highest VAT rate with a common law rate of 27%.

The average rate in the EU and UK is around 21%.

[encidious Opus]

I always appreciate Prokofy Neva forum posts. They often deal with  my SL interests; mainland and the SL economy, especially the virtual real estate economics. Lots of in-depth information to ponder. For what it's worth, I did have to raise rent a bit on some of the discount parcels. 

[Prokofy Neva]

On 4/14/2022 at 12:43 AM, beethros Karas said:

Member state	Country code	Super reduced	Reduced rate	Normal rate
Austria	AT		10%, 13%	20%
Belgium	BE		6%, 12%	21%
Bulgaria	BG		9%	20%
Croatia	HR		5%, 13%	25%
Cyprus	CY		5%, 9%	19%
Czech Republic	CZ		10%, 15%	21%
Denmark	DK			25%
Estonia	EE		9%	20%
Finland	FI		10%, 14%	24%
France	FR	2,1%	5,5%, 10%	20%
Germany	DE		7%	19%
Greece	EL		6%, 13%	24%
Hungary	HU		5%, 18%	27%
Ireland	IE	4,8%	9%, 13,5%	23%
Italy	IT	4,8%	5%, 10%	22%
Latvia	LV		5%, 12%	21%
Lithuania	LT		5%, 9%	21%
Luxembourg	LU	3%	8%	17%
Malta	MT		5%, 7%	18%
Netherlands	NL		9%	21%
Poland	PL		5%, 8%	23%
Portugal	PT		6%, 13%	23%
Romania	RO		5%, 9%	19%
Slovakia	SK		10%	20%
Slovenia	SI		5%, 9,5%	22%
Spain	ES	4%	10%	21%
Sweden	SE		6%, 12%	25%
United Kingdom	UK		5%	20%

The Member State with the lowest VAT rate is Luxembourg with a common law rate of 17%.

Hungary is the Member State applying the highest VAT rate with a common law rate of 27%.

The average rate in the EU and UK is around 21%.

VAT is two or three times the sales tax of US states, some of which have no sales tax at all. Look at the top ones, Arkansas, Louisiana, Washington state, etc. - 9%.

Would you say that European land dealers dealt with the cost of VAT by advertising more? Because likely they couldn't raise their prices much more. 

Again, my query from the original post is not "Please tell me how Europeans have suffered more than Americans all this time" -- because look, Europeans still suffer more.  My query is why there is little complaint about the new sales tax application to Americans. And the answer is: most people have basic accounts or only a premium account or a small amount of holdings and don't feel it. And those with land businesses or any kind of business (every business feels a change to land fees) don't post on the forums. 

Edited April 16, 2022 by Prokofy Neva

[Prokofy Neva]

On 4/13/2022 at 6:47 AM, Mollymews said:

i think the response to the US taxes has been muted for the reason that Linden has been passing on the VAT cost to europeans for quite some time, and more recently GST to australians. So the feeling from some (if not many) US people is oh! well, was good while it lasted

 

given the tax doesn't apply to L$ purchase, only to tier and premium, i think it might have some effect on US people switching from mainland tier ownership to renting

as some european posters (subject to VAT) have mentioned , they switched from paying tier to renting mainland

i dunno tho how many US people do rent mainland now, or might switch to renting for it to make any substantial difference to any one landlord when viewing landlords individually

I don't think this is the answer. And I don't think there is going to be any surge of Mainland rentals, because I think the tax, COVID, gasoline prices, etc. will have more of an effect globally that will offset this, if true.

Sadly, most Americans are oblivious to what happens in Europe, even in SL. When Americans responded back in the day -- like Ingrid is responding here to me -- "Go complain to your MPs" -- it only enraged Europeans because they felt *in the SL economy* they were being treated unfairly*. They felt they should have lower land prices once VAT was applied so that they could have a "level playing field". But LL didn't think that was justified.

And again, you can tell people to suck it up because the Europeans already suffered from this, but that's not the question. The question is why more Americans aren't complaining -- there are all these people in the land business, with large and small holdings; there are more Americans than Europeans and others in SL, yet you don't see hardly any complaints (as you did when VAT was applied and there were uproarious demonstrations with red hands spurred by certain land dealers who were hard hit).  So again there are only these hypotheses:

o In fact, non-Americans make up the majority of SL residents, not Americans, as believed based on past transparency with statistics? SeraphimSL, for example, knows exactly where their log-ons are from, as does LL of course, but this information isn't made public.

o Most people in the land business don't post on the forums so you have no idea what goes on with them.

o Perhaps there are now larger sectors of the economy than land, based on fashion or vehicles or breedables -- and how can we know that or how could we tell?

o Most people don't have very much land.

 

[Love Zhaoying]

I guess LL better raise their prices on Second Life, to make up for all these people leaving due to inflation and taxes. 

[So Whimsy]

Am not complaining because as a resident of the EU I've been paying tax on stuff (especially land, yay for 19%!) for a very very long time.

[Marianne Little]

I am sure it will be started new threads as soon as American people discover they pay taxes now. Bigger landowners and Premiums will discover it. But only when the automatic renewal charge them a higher amount and they go wtf?

I believe the majority of American residents are basic who rent a small place and pay a few hundred. It is no tax on buying lindens, so they will not see any changes.

All SL residents are mostly basic.

[Mollymews]

4 hours ago, Prokofy Neva said:

The question is why more Americans aren't complaining

 

my observation of USA people is that individually they have a sense of fairness that manifests itself in ways that doesn't always manifest itself in the same way that it does in other peoples

individually USA people rate in many surveys as amongst the most charitable and helpful people in the world. For example, the World Giving Index over the last decade gives USA people 72% for helping a stranger, 61% for giving a charitable donation, and 42% for volunteering their time to an organisation. Which puts the USA ahead of all other peoples of the world on aggregate

this sense of fairness manifests itself in other ways also. Like in some USA children's sports there is a winning margin rule. In junior american football for example, when a team gets to 30 points ahead of the opposition team then the game is stopped. The ethos is that it is not fair to the weaker team to keep on playing as it serves no useful purpose. The better team (winner) has already been established, and if the game continues then it can breed arrogance in the better team players and demoralise the weaker team players which can lead them to drop out of the sport. There is a hint of noblesse oblige in this ethos. With great power comes great responsibility toward those less fortunate

which makes a certain sense when we are a great power, which the USA collectively is. This collective understanding of power and privilege being a result of how individuals apply this to themselves in their everyday lives. This is not to say that the USA is perfect, no nation is. Is just to say that is my observation USA people have an awareness of their own power and privilege both collectively and individually and are mindful of the effect of this on themselves and others   

maybe more basically. People within powerful collectives and who individually are helpful, charitable and generous are less inclined to grumble/complain about their personal circumstances within the center of power that their collective (nation) provides

[Prokofy Neva]

1 hour ago, Mollymews said:

my observation of USA people is that individually they have a sense of fairness that manifests itself in ways that doesn't always manifest itself in the same way that it does in other peoples

individually USA people rate in many surveys as amongst the most charitable and helpful people in the world. For example, the World Giving Index over the last decade gives USA people 72% for helping a stranger, 61% for giving a charitable donation, and 42% for volunteering their time to an organisation. Which puts the USA ahead of all other peoples of the world on aggregate

this sense of fairness manifests itself in other ways also. Like in some USA children's sports there is a winning margin rule. In junior american football for example, when a team gets to 30 points ahead of the opposition team then the game is stopped. The ethos is that it is not fair to the weaker team to keep on playing as it serves no useful purpose. The better team (winner) has already been established, and if the game continues then it can breed arrogance in the better team players and demoralise the weaker team players which can lead them to drop out of the sport. There is a hint of noblesse oblige in this ethos. With great power comes great responsibility toward those less fortunate

which makes a certain sense when we are a great power, which the USA collectively is. This collective understanding of power and privilege being a result of how individuals apply this to themselves in their everyday lives. This is not to say that the USA is perfect, no nation is. Is just to say that is my observation USA people have an awareness of their own power and privilege both collectively and individually and are mindful of the effect of this on themselves and others   

maybe more basically. People within powerful collectives and who individually are helpful, charitable and generous are less inclined to grumble/complain about their personal circumstances within the center of power that their collective (nation) provides

While there may be the "Protestant ethic" driving some of these features, we also get a tax deduction for charitable donations. Unlike Europe, where the state funds things from taxes, here, private charities perform the function and people get tax write=offs. But I didn't find Americans sympathizing with the VAT hit that Europeans took back in the day in SL and responded with the idea that people should have a different social system or write their representatives. So understandably, Europeans are unsympathetic now that Americans are taxed and PS they aren't even taxed as much, half or more less in fact.