February 27, 2014 in Gaming News
The United States Congress this week released a blueprint for a top-to-bottom overhaul of the American tax system, offering up a variety of tax benefits for businesses. That’s the good news. But the document, released by the House Ways and Means Committee, also calls out one major potential problem area for video game developers like Activision and Electronic Arts.
The Tax Reform Act of 2014 includes an “improved, permanent R&D tax credit,” which architects of the blueprint like Rep. Dave Camp (R-Michigan) say will give American companies the “certainty they need to compete against their foreign competition who have long had permanent R&D incentives.”
However, on page 24 of the Tax Reform Act of 2014, the document plainly states that this R&D tax credit will not be available for companies that make “violent” video games. The blueprint includes a provision for “preventing makers of violent video games from qualifying for the R&D tax credit.” It’s unclear what parameters would be used to decide what is “violent” and what is not or why video games were specifically called out.
The very next page of the document states that the Tax Reform Act of 2014 will close loopholes and stop the practice of using the tax code to “pick winners and losers based on political power rather than economic merit.” But, as The Washington Examiner points out, if every industry gets to keep the R&D tax credit except the video game business, how is that not picking winners and losers?
In a landmark 2011 decision, the United States Supreme Court ruled that video games–violent or not–are a form of art and are entitled to freedom of speech protections. The removal of the R&D tax credit for violent game developers would no doubt face an uphill battle given this precedent.
House Speaker John Boehner (R-Ohio) said Wednesday that he would welcome the beginning of a discussion concerning tax reform, but made clear that Congress isn’t likely to make any real moves on the subject this year.
Video games have been a topic of discussion in Washington for a long time, but the debate has risen to the fore following the December 2012 Sandy Hook massacre in Connecticut. US president Barack Obama has even ordered research be conducted into the connection between gaming and violent behavior.
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