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How Game Makers Like EA Mine for Tax Breaks
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.
"why the government should subsidize such a mature and profitable industry whose main contribution is to create amusing and sometimes antisocial entertainment"
Gotta have circuses with your bread.
But EA is a "job creator", so those tax breaks "trickle down" to the hoi polloi in the form of jobs.
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.
From TFA, EA conforms to generally accepted account principles, or GAAP as we call it in the biz. So hop off me jet pack and don't assume because a company shows a loss they are sleazy, chadwhick. I find it quite amusing that the common folk just assumes every corporation has some evil voodoo master accountant, probably wearing a green visor with a bean counter too, sitting in the back room scheming how to make the common tax payer subsidize his/her (to be pc) business. The amount of rigamarole that a corporation such as a EA has to go through to even file its taxes costs more than what most of us make in the past 4 years combined. Yeah, the tax code has all these fancy dancy write offs, deductions and what not, but it also has something called phase outs. Yeah, phase outs. That means the nice little deduction that congress gave you, gets phased out over certain income levels. Take the article with a grain of salt. Its a complicated subject that takes years to master and it was written by somebody with a liberal arts degree who asked 2 questions to 2 people.
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.
The bitter lessons of a veteran coder: http://bitterprogrammer.blogspot.com
...they are crap with a controller, but give them a calculator, paper on which to write and a system to exploit and BAM - high score everytime!
Constructive Cannibalism +1.
Just don't do it too often - they tend to be high in fat.
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.