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Gaming’s biggest trade body throws support behind Republican tax reform

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The ESA is all about those corporate tax cuts

House Republicans Introduce Tax Reform Legislation Win McNamee/Getty Images

The Entertainment Software Association (ESA) came out in favor of the House of Representatives’ proposed tax reform bill, which it first detailed earlier today. The trade association, which runs the Electronic Entertainment Expo and serves the interests of U.S.-based game publishers, gave a thumbs up to what it sees as a system that could potentially stimulate the gaming job market.

“Today’s tax reform proposal will energize tech sector innovation and economic opportunity, ESA president and CEO Michael Gallagher said in a press release. “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. ESA commends Speaker Ryan, Chairman Brady, House leadership, and the Ways and Means Committee for crafting a reform package that drives US economic growth. The video game industry is committed to working with congressional leaders at every stage of this process.”

It tracks that the ESA would approve of a bill that would drastically lower taxes for corporations. Earlier this year, the trade body reportedly entered talks with the Trump administration to ensure possible trade tariffs wouldn’t increase costs for companies who manufacture games and hardware overseas. That pertains to a large number of the ESA’s members, meaning a potential tariff would have required many companies to pay big time.

That fear may be assuaged with the proposed bill. It would allow domestic companies to generate overseas income tax-free, although it institutes other taxes and deduction limits elsewhere. For the most part, however, corporations and big companies — like many of those with membership in the ESA, including Activision Blizzard, Bethesda and Electronic Arts — stand to see the biggest benefits from the Republican party’s tax reform structure.

Some economists with Republican ties argue that lower corporate taxes will lead to both higher overall revenue and wages for workers, but the relationship between the two remains in contention. The possible cuts on corporate taxes — and increased taxation on individuals, particularly those in lower income brackets — have left many to question whether the bill can pass as-is, and whether it will benefit the vast majority of the American population.

Our sister site Vox has an in-depth look at what the tax reform bill includes and means for the country. Meanwhile, some game developers are already beginning to question the sincerity of the ESA’s statement, particularly its claims that the bill will have an overall positive effect on the industry.

The replies to the ESA’s tweet about the bill are filled with backlash, as industry members argue that it’s the upper-level company staffers who stand to benefit, not the lower-level workers — like game designers.

We’ve contacted the ESA about the pushback, and we’ll update when we hear back.

1 update made to this story
Updated on November 3, 2017

We’ve updated this story with the most recent statement from the ESA on the proposed tax reform.