Policy: Technology

GOP tax plan singles out violent video game makers

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Beltway Confidential,Opinion,Taxes,Supreme Court,IRS,Ashe Schow,House Ways and Means Committee,Technology,Tax Credits

In another example of the government picking winners and losers, the House Ways and Means Committee, in its long-awaited tax reform bill, singles out violent video game makers for tax increases.

On page 19 of the executive summary, the committee mentions an improved and permanent research and development tax credit, which has benefitted countless industries from manufacturers to software creators to food producers.

The summary advocates for “an improved, permanent R&D tax credit, finally giving American manufacturers the certainty they need to compete against their foreign competition who have long had permanent R&D incentives."

Well, unless they make violent video games.

Despite the promise of an improved R&D tax credit, the bill – on page 24 – removes that tax credit from the violent video game industry, under a section about closing loopholes.

One of the plan's provisions: “Preventing makers of violent video games from qualifying for the R&D tax credit."

This is funny, given the fact that on the very next page the summary says the bill “stops the practice of using the tax code to pick winners and losers based on political power rather than economic merit.”

How is letting every industry except the violent video game industry keep the R&D tax credit not picking winners and losers?

This would affect companies like Electronic Arts, which makes violent games like "Battlefield" but also non-violent games like "FIFA Soccer" and "The Sims."

The issue also deals with First Amendment rights. The Supreme Court has upheld the view that video games, whether violent or not, are a form of art and receive freedom of speech protections. Removing the R&D tax credit from violent game makers is essentially saying that, because some lawmakers don't like that type of art, it's unworthy.

“Just because it's art that you don't like, or don't think is ‘good,' doesn't mean it's not art and entitled to First Amendment protections,” wrote Forbes video game contributor Dave Their in a May 2013 post. “If the government started taxing depictions of violence, it would take on the responsibility of deciding what art was worthy and what art must be punished.”

Now, removing a tax credit is not the same as imposing a new tax, but in both cases, the tax burden of the company increases.

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