Tax Breaks For Game Developers: A Good Idea?

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Steve Anderson
The Video Store Guy
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Tax Breaks For Game Developers: A Good Idea?

It's Tax Day in the United States, the day in which tax filings for the year are due to be turned in. And a new move in the Georgia statehouse is one that seems to be gaining ground in plenty of places, though with this new move is coming some new controversy. Georgia Governor Nathan Deal signed a new bill into law that establishes fully $25 million in tax breaks to developers, giving Georgia just a little extra stance in entertainment production, and potentially even kicking off a new wave of such breaks arriving in other states.

The bill in question, House Bill 958, made it through the Georgia House and Senate, earlier this year, and included not only the video game support, but also several other tax breaks for food banks, and even for the general populace in the form of sales tax holidays. Several companies were reportedly in line to land tax breaks on this front, ranging from Georgia media giant Cartoon Network Games to Tripwire Interactive of “Red Orchestra” to “Smite”'s own Hi-Rez Studios.

 

There are of course conditions for such bills, starting with the requirement that studios have to keep offices in Georgia, and a total payroll that measures at least $500,000. Conversely, the studios must have a gross income of no larger than $100 million, and the Department of Economic Development in Georgia will handle the job of determining if the company seeking tax credit is actually and primarily in interactive entertainment.

 

This isn't really a first for Georgia, though, as the state has already put up quite a bit in tax credits for entertainment projects like television shows. On a certain level, this makes sense; while America hasn't been exactly top of the heap when it comes to making things like needles and blenders and things like that, it's pretty much the end-all-be-all when it comes to entertainment. Sure, countries around the world have entertainment industries—you'd be amazed at what the various Scandinavian countries are doing with horror film; for being so close together they have a huge number of differences in the overall approach—but it's the American properties that tend to show up most everywhere and draw the viewers in. Just ask yourself one question: when I think of comic book characters, would I think of Tintin before I thought of Captain America? That will show you how extensive the American entertainment industry really is.

 

By like token, there's a lot of money to be had in entertainment. Just ask the creator of “Flappy Bird.” For Georgia to put money in the entertainment industry, meanwhile, is a terrific sign of support in this rapidly growing field, and a great way to put some people back to work, a phenomenon that, in general, we could all stand to see a little more of these days. With people working in entertainment, said people can buy clothes at retailers, buy lunch at restaurants, buy food at grocery stores and, in general, help keep a great many businesses up and running. That's the kind of impact that any state government can get behind, and keeping a part of the tax base up and running should even yield a positive net benefit. For other states considering such a program, there's a lot of reason to recommend it, and not much reason to leave it behind.

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