Video Games Score Vast Subsidies

Cold War-era tax breaks go to the likes of zombie shoot-'em-ups
By Mark Russell,  Newser Staff
Posted Sep 11, 2011 8:21 AM CDT
Video Games Score Vast Subsidies
In this video game image released by Deep Silver, zombies take over a tropical resort in a scene from "Dead Island."   (AP Photo/Deep Silver)

By combining tax breaks, deductions, and subsidies designed for the Cold War, video game production is now one of the most highly subsidized businesses in the United States, reports the New York Times. Leading software developer Electronic Arts, for example, has made $1.2 billion in profits worldwide over the past five years, but was able to report a loss thanks to creative accounting, and paid only $98 million in taxes in that time.

“Software and high-tech industries are the brain trust of the US,” said the chief operating officer of a software consulting group. “We can’t afford to lose that knowledge and those high-paying jobs to India or anywhere else.” Many states are ramping up tax breaks, hoping to encourage software jobs, but many studies cast doubt on the effectiveness of this strategy. “The research credit benefits the wrong companies and encourages the wrong kind of research,” said a tax expert and technology executive. “By diverting funding and attention from where it could be most useful, the credit is hobbling American innovation.” (Read more video game developers stories.)

We use cookies. By Clicking "OK" or any content on this site, you agree to allow cookies to be placed. Read more in our privacy policy.
Get the news faster.
Tap to install our app.
Install the Newser News app
in two easy steps:
1. Tap in your navigation bar.
2. Tap to Add to Home Screen.