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EA headlined in US tax break report

Monday, 12th September 2011 00:37 GMT By Brenna Hillier

This weekend’s on dit is a report exposing gaming companies’ access to substantial tax breaks in the US – making particular note of EA.

A somewhat scathing report from the New York Times describes the games industry as one of the most “highly subsidized businesses” in the US, thanks to “deductions, write-offs and credits mostly devised for other industries in other eras”.

The report details tax breaks created in the 1950′s and 1960′s, before the US games industry’s rise to a business with $15 billion sales per year, which are now leveraged by developers and publishers.

In the US, the corporate tax rate is 35 percent, and with EA’s reported global profits of $1.2 billion in the last five years, that puts its baseline tax responsibilities at $420 million – but EA confessed to paying just $98 million in that period.

EA’s financial reports claim a net loss over that period thanks to “deferred revenue, deductions for executive stock options and a variety of accounting requirements”, strategies other publishers described as less aggressive than those used elsewhere.

EA reported $6 billion in software development costs, just one of a number of perfectly legal deductions available to it, including “tens of millions” in research and development costs. The mega-publisher has been a vocal advocate of further US tax assistance to the games industry.

The report concedes that tax breaks accessed by games companies are also available to other industries, including manufacturing.

Thanks, Joystiq.

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5 Comments

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  1. ultramega

    Hah. Death of an Empire 101. Sadly the US of A has to bring down the rest of the world with it though…

    #1 3 years ago
  2. DarkElfa

    Well, the Brits would know all about death of an Empire, wouldn’t it?

    #2 3 years ago
  3. ultramega

    I suppose they do too.

    #3 3 years ago
  4. DarkElfa

    Ah, so you make a comment about someone else’s nation without posting your own for comparison?

    #4 3 years ago
  5. ultramega

    I’m Canadian. And I was referring to the 19th century mindset the USA has in economics, with many thinking a pure laissez-faire economy can somehow create a utopia. Which, of course, couldn’t be further from the truth. It’s just frustrating, especially seeing the influence our neighbours to the south are now exerting on our government… we now have the most underhanded and right wing government we’ve ever had federally. And many are just too shortsighted to see the impact it will have on our country… So don’t take the comment personally, if you don’t think like the majority of your country, it’s just frustrating seeing the state of everything.

    #5 3 years ago