(Originally published here.)
There are a few things to like in the House Ways and Means Committee’s new tax plan. The same can’t be said of a proposal to punish makers of violent video games, presumably because of the harm they cause children. (A tip of the hat to the Washington Examiner, which spotted this.)
Right now, the U.S. tax code favors of some activities while discouraging others, often for no good reason besides the influence of connected lobbyists. As if that weren’t bad enough, many important provisions in the tax code are often renewed on an ad hoc basis rather than made a permanent part of the law.
One important case is the credit for business research and development. The House’s tax plan attempts to reduce or eliminate many of the worst distortions, and as the authors say in their executive summary, the “Tax Reform Act of 2014 stops the practice of using the tax code to pick winners and losers based on political power rather than economic merit.”
Unfortunately, this lofty goal is violated by the discrimination against video-game developers that lawmakers deem violent.
Aside from being unfair — good luck defining “violent” given all the carnage that Super Mario has caused over the years — it’s also bad for the economy.
According to the Entertainment Software Association, a trade group, the video-game industry is one of the fastest growing in the U.S. by sales. It’s also a source of good jobs. From 2005 through 2009, employment in computer and video-game software publishing increased at an annual rate of 8.7 percent — a period when total private-sector employment fell. The average annual compensation (including benefits) in the industry was about $90,000 in 2009.
If this isn’t persuasive, think of some of the positive spillovers associated with the development of violent video games: sophisticated artificial intelligence, realistic rendering of open worlds, powerful portable-electronic devices, motion control, and high-speed Internet infrastructure. (For that matter, thepornography industry has also been behind many of the big innovations of the Internet, including online payments and high-quality video streaming.)
Technology invented by video-game designers is often adapted to train emergency workers and soldiers. (Read this article by the U.S. Army for more on the subject.) But according to the House tax plan, research spending that might help save lives is less valuable than, say, R&D spending by beverage makers on new ways to foist yet more over-sweetened drinks on children.
(Matthew C. Klein is a writer for Bloomberg View. Follow him on Twitter.)
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