With all the debate over the importance of tax rebates and incentives currently flooding the political world, it’s somewhat surprising to discover that one of the “most highly subsidized business in the United States,” according to a former Treasury Department worker turned tax professor, is also one of the few true success stories in media over the last few years. That’s right, we’re talking about video games.
According to Calvin H. Johnson, a tax professor at the University of Texas in Austin, the video game industry manages to amass so many tax deductions, credits and write-offs because it stretches across multiple verticals, including software development and publishing, online retailing and the entertainment industry (for example, costs of software development are deductible as part of a 1969 tax break to encourage job growth in the U.S., while at the same time, companies can also claim tax credits for that development thanks to a separate credit for research and development in tech fields).
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The worry is that, without said breaks, the video game industry would leave the U.S. and move north (Canada offers even better tax breaks, apparently), losing somewhere in the region of 32,000 jobs from the American economy.
Despite all the politicians’ talk about closing tax loopholes and creating additional tax revenue to improve the American economy, however, a New York Times report predicts that even more tax breaks may be headed to the gaming industry in the near future; it points out that more than 20 states are already offering developers enough incentives to cover the cost of wages, development and manufacturing, and quotes figures within the industry who suggest that video games should also be eligible for the federal tax breaks that television and movie producers are offered.
Financial ruin may await us as a result, but—tongue firmly in cheek—at least we’ll have kept those jobs away from the Canadians.
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Graeme McMillan is a reporter at TIME. Find him on Twitter at @Graemem or on Facebook at Facebook/Graeme.McMillan. You can also continue the discussion on TIME’s Facebook page and on Twitter at @TIME.