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Businesses Government The Almighty Buck United States Games

How Game Makers Like EA Mine for Tax Breaks 123

Sometimes it seems like the U.S. government's relationship to commercial video games is mostly adversarial, as when public officials vilify or move to censor games (even when the results are mixed). An anonymous reader writes with a reminder that the business side of the games business has a much cozier government link, as reflected in this excerpt from the New York Times: "Because video game makers straddle the lines between software development, the entertainment industry and online retailing, they can combine tax breaks in ways that companies like Netflix and Adobe cannot. Video game developers receive such a rich assortment of incentives that even oil companies have questioned why the government should subsidize such a mature and profitable industry whose main contribution is to create amusing and sometimes antisocial entertainment." Since filling out even a simple return can be rather game-like, maybe they're just doing what they do best.
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How Game Makers Like EA Mine for Tax Breaks

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  • Obvious fix: (Score:3, Interesting)

    by Anonymous Coward on Sunday September 11, 2011 @11:53AM (#37368632)

    Simplify the US tax code, so that it does not manipulate the market by rewarding/penalizing different industries, based on what legislator wants to curry favor with a particular company.

    Of course, that leaves a lot less opportunity for graft and corruption, so the odds of it getting done in DC are slim to none.

  • by MagikSlinger ( 259969 ) on Sunday September 11, 2011 @12:15PM (#37368734) Homepage Journal

    I worked at a video game company here in Vancouver, and I remember tax time being interviewed by a consultant about my "R&D" innovations. Anything, I mean ANYTHING, even remotely like R&D. "Uh, you mean even the work I spent optimizing the code?" "Yes."

    I was told at one point in the company's history, our biggest source of income were tax credits from the Government of Canada.

  • Re:Oh please (Score:4, Interesting)

    by mabhatter654 ( 561290 ) on Sunday September 11, 2011 @02:46PM (#37369794)

    Well the problem is that when we here record profits what they REALLY mean is record EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) which is a fancy way of saying we made sales, and cut costs.. before then the accountants will start their magic JuJu to whittle the taxable portion down as far as they can so they don't have to pay dividends to shareholders. That's where executive salaries come in because companies would rather pay for ridiculous properties in New York City, multi-million dollar salaries, hoard huge sums of lucre, and racing teams than pay out the dividends or taxes. When the CEO wants X million dollars that's where it comes from... In normal business accounting you WANT to be paid out of the non-EBTDA money... because that's what investors and efficiency guys don't question.

  • by Wildclaw ( 15718 ) on Sunday September 11, 2011 @07:17PM (#37371728)

    The better question is, "why do corporations pay tax at all?"

    To encourage corporations to actually invest back into their products instead of stockpiling money that then is used to buy up competition.

    it's simply built into the price you pay. So it's just effectively a VAT in different clothing.

    Corporate taxes are on net profits, not turnover.

  • by hairyfeet ( 841228 ) <bassbeast1968 AT gmail DOT com> on Monday September 12, 2011 @05:55AM (#37374838) Journal

    Then why are they not all in Somalia? No taxes at all there. Because from the stats I've seen higher taxes on the wealthy lead to lower unemployement and greater economic growth [thomhartmann.com] yet all we hear from the right is "Give teh rich more MONIES! nom nom nom". If this strategy worked, why didn't Raygun sit on top of unprecedented growth? Oh right, we had a nice little recession after he cut the hell out of taxes on the rich.

    Its actually quite simple, the rich hoard, the poor and middle class spend. All that money being hoarded? is dead money, its gone, poof! If they invest it it sure ain't here. No in the past 30 years we've had trickle upon, voodoo economics, the "hey lets have trade agreements with those with NO workers rights or environmental laws, that'll work!", two wars while CUTTING taxes, the first time in the entire history of the USA that's happened BTW, and "bailout baby bailout".

    If the right were correct in their theory, why we should be having a hell of a economy, with jobs everywhere....oh wait, they used their tax breaks to close 21,000 factories [businessinsider.com] in this decade alone. Why? Because in China they can poison the workers, the air, the water, and it costs them NOTHING. No OSHA, no clean air act, no workman's comp, they can give every worker cancer and all they'll get is fired.

    Is that REALLY the America you want? Where your kids play outside wearing gas masks so they don't get sick, and where your ass better have enough money for purified water or you will suck down so many toxins you might as well drink gasoline? Personally I like having clean air, water, and not working in sweatshops, thanks. of course that must make me an evil socialist since I don't support everything that can be done to maximize profits, which in the end is all the right gives a fuck about.

"If the code and the comments disagree, then both are probably wrong." -- Norm Schryer