A Harvard law scholar and professor of law at Yeshiva University has proposed taxing income in virtual worlds. In her opinion, this will increase revenues to the state treasury.

In her research paper titled Taxing the Metaverse, Christine Kim argues that national tax codes should cover the emerging Web3 sector, specifically the metaverse. The professor noted that the US Supreme Court previously determined that taxable income includes an undeniable increase in the size of property that is fully realized and is at the full disposal of the taxpayer.

If activities in the metaverses are not subject to fees, this area will turn into a “tax haven”. The lawyer noted the growth in investments in the metaverse, which has already exceeded $120 billion. By 2024, the market value of this sector could grow to $800 billion, Kim suggested.

The digital format of the metaverses makes it possible to carry out all kinds of activities and track the well-being of individuals. Therefore, Metaverse users in the US can pay taxes immediately after they receive profits, including unrealized profits and income that remains in the Metaverses.

Kim proposed two tax compliance strategies. First of all, the platforms themselves can withhold taxes from their users. Another, less profitable alternative is payments at the place of residence. Platforms can send the necessary information to users who will be required to fulfill tax obligations on their own. According to Kim, this approach could fundamentally change the current US tax system, as well as open up new opportunities for lawmakers, including those who do not show much interest in Web3 and the metaverse.

According to the forecast of the American Citibank, by 2030 the market capitalization of the metaverses will reach $13 trillion, and the user base of the metaverses will grow to 5 billion people.