As ESA enthusiastically backs GOP tax reform plan, some devs dismay
The Entertainment Software Association, which cheered the Trump administration’s STEM education program earlier in 2017, released a statement today praising the tax reform bill currently rolling through Congress.
It's a significant endorsement from the organization that deems itself the voice of the U.S. video game industry, particularly as the tax reform proposal is met with uncertainty and scrutiny from the public as well as members of both political parties.
The Tax Cuts and Jobs Act, which the Washington Post says cuts the corporate tax rate in America from 35 percent to 20 percent, comes with a slew of changes to the tax code that impact Americans of all income levels, including game developers.
Among (many) other changes, the current seven tax brackets would be reduced to four, tax breaks on mortgages would be shrunk for future homeowners, and numerous breaks for chronic medical conditions, college loans, as well as tax credits that encourage the hiring of veterans, would be eliminated.
In its statement praising the bill, ESA CEO Michael Gallagher says, "Today’s tax reform proposal will energize tech sector innovation and economic opportunity. For the $30.4 billion US video game industry, which employs more than 220,000 people all across the United States, the pro-growth policies introduced will incentivize greater US investment and more high-quality American jobs."
According to a Wall Street Journal and NBC poll released two days ago, the GOP tax reform efforts are currently polling at 35 percent approval rating (40 percent said they were unsure or had no opinion), and that sentiment seems reflected among game developers.
Checking on Twitter, responses to the ESA’s tweet announcing the statement ran overwhelmingly negative, with employees from large companies such as Riot Games, BioWare, and Jam City joining independent developers in criticizing the ESA’s position. The ESA declined to comment on the record on these sentiments when reached by Gamasutra.
In making its pitch for the Tax Cuts and Jobs Act, Congressional Republicans and President Trump have argued that the listed tax cuts will benefit middle-class Americans and provide growth for the economy. However, multiple outlets have pointed out that this bill may raise taxes paid by people and companies in parts of the country where game developers have clustered, such as California, Maryland, Virginia, New York and Washington State.
It’s also worth pointing out that the Republican tax bill does not require companies to use tax savings on new hiring, employee raises, or preventing layoffs (something that has impacted many game developers in 2017). The bill appears to rely on the economic argument that more tax cuts for large companies will translate to more jobs (which is possibly one of the most contentious arguments in American history).
Gamasutra has reached out to several ESA member companies to see if they have any comment on Gallagher’s statement. We will update this post if they get back to us.