Left Coast Voices

"I would hurl words into the darkness and wait for an echo. If an echo sounded, no matter how faintly, I would send other words to tell, to march, to fight." Richard Wright, American Hunger

Archive for the day “October 12, 2011”

Who Needs A Tax Break?

The more I read about rich people and big companies who get tax breaks, the more I am coming to the conclusion that the only reason we are not balancing our national budget (I know that is an understatement), is because not everyone is paying tier dues.

Now I accept that there are some who need the extra help – doctors and teachers in areas that go to underserved areas out of a sense of service (Northern Exposure anyone?), but corporate fat cats?

How about those poor deserving millionaires who are designing violent video games? I’m sure these humble citizens are providing a national service. There are a number of examples of different companies as noted by David Kocieniewski in a recent New York Times article.

Here’s a few highlights:

1. Calvin H. Johnson, who has worked at the Treasury Department and is now a tax professor at the University of Texas at Austin. “Those tax incentives — a collection of deductions, write-offs and credits mostly devised for other industries in other eras — now make video game production one of the most highly subsidized businesses in the United States.

2. “Electronic Arts of Redwood City, Calif., shipped more than two million copies of Dead Space 2 in the game’s first week on the market this year. It shows a total of $1.2 billion in global profits the last five years using an accounting method that management says captures its operating profits. But largely because of deferred revenue, deductions for executive stock options and a variety of accounting requirements, the company officially reports a net loss for the period. And the company reports that it paid out $98 million in cash for taxes worldwide in those years.”

3. ” During the last five years, Electronic Arts has claimed tens of millions in tax savings from research and development credits for its various games, according to the company’s regulatory filings. (Company officials declined to specify how much of that total came from the federal government.).”

Most of these tax breaks came about when these companies were just beginning and, as start ups, they needed help. But they reinvested their profits in a sophisticated lobbying system to ensure they keep these benefits.

Helping start ups is an admirable step. However, there needs to be clear limitations in how long this goes on, and a clear understanding that these companies owe a debt to the taxpayer – simply that they pay their taxes in years to come.


Alon Shalev is the author of The Accidental Activist (now available on Kindle) and A Gardener’s Tale. He is the Executive Director of the San Francisco Hillel Foundation, a non-profit that provides spiritual and social justice opportunities to Jewish students in the Bay Area. More on Alon Shalev at http://www.alonshalev.com/and on Twitter (#alonshalevsf).

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