Yesterday’s edition of the New York Times contained a front-page story about how our tax system is unfair, inefficient, and logic-defying. The evidence? Video-game-makers are “one of the most highly subsidized businesses in the United States,” thanks to a series of tax incentives largely created to benefit other industries. Because video games "straddle ... software development, the entertainment industry and online retailing, they can combine tax breaks in ways that companies like Netflix and Adobe cannot," meaning big video-game businesses like Electronic Arts are getting millions in subsidies.
While no one is blaming companies like EA for taking advantage of these tax breaks, the Times is feeling a little judgey about it. Check out the piece's lead: "The United States government offers tax incentives to companies pursuing medical breakthroughs, urban redevelopment and alternatives to fossil fuels. It also provides tax breaks for a company whose hit video game this year was the gory Dead Space 2, which challenges players to advance through an apocalyptic battlefield by killing space zombies." And this later observation: "As a result, the company with the defiant sales slogan, 'Your Mom Hates Dead Space 2,' in effect gets financial help from moms and other United States taxpayers to reduce its federal tax bill." Also of note is who's not enthused about video games' good fortune: the oil business. According to the Times, "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." In other words, a silver lining: Our tax-incentive system may be dysfunctional, but at least in this one small particular it is chapping big oil's ass. [NYT]