New U.S. tax bill singles out video game studios for tax hike

In proposed legislation aimed at reforming the U.S. tax code, a research and development credit would continue... for anything but "violent video games." The House Ways and Means Committee has completed and submitted its tax bill -- The Tax Reform Act of 2014 -- and the Washington Examiner has picked up on an extremely strange and troubling bit of policy: Were it to become law, the R&D credit will exclude companies that make violent video games. Despite promising "an improved, permanent R&D tax credit, finally giving American manufacturers the certainty they need to compete against their foreign competition who have long had permanent R&D incentives," the bill aims to purposefully exclude the video game industry -- despite the fact that U.S. companies face just such competition, notably from Canada. In the list of what the bill purports to accomplish in its executive summary, "Preventing makers of violent video games from qualifying for the R&D tax credit" comes just after "Prohibiting tax deductions for costs incurred by illegal businesses." The wording is vague, but that seems to suggest that companies that make any violent video games, regardless of what else they may make, would be excluded from the credit. This seems to fly in the face of the Supreme Court's decision that video games qualify for First Amendment protection in 2011. Ironically, the summary states that the bill "stops the practice of using the tax code to pick winners and losers based on political power rather than economic merit" -- using the example of the politically controversial alternative energy industry. The bipartisan committee that produced the bill was chaired by Michigan Republican Representative Dave Camp, pictured above. The bill is still under discussion in the House, and will not go to a vote immediately.