Yeah, I’m the taxman,,,

Looks like games may be going the way that smoking, drinking (and in some places) gambling - it’s a thing that governments don’t really like but they don’t not like it quite enough to ban it, so they might tax it instead.

As has been quite widely reported, a politician in the US state of Texas has recently proposed a state tax on video games.

The state senator takes an odd line. Quoted in the The Brownsville Herald, he says
 “You have all these kids buying video games, and sometimes they are good, some are bad and that’s not my call […] But I think that we can generate (money) to put toward the schools they go to.”

The equivocation on the worth of video games is interesting, and the fact that it’s a tax seemingly intended to focus on children (though I’m not sure, in fact, how the distribution of spending across age maps out), and that it seems to be a hypothecated tax.

But my broad point is the gradual shift we are seeing in the Western (or at least north American) construction of the idea of the video game, the start of a new ‘Game_wave’ maybe.

First it seems that video games are gaining gradual acceptance as an economic fact, even if their cultural acceptance amongst the establishment (more on that in a future post) lags behind the economic clout. 

Second, and I might be reading this in, it does look like another ‘sin tax’ or ‘vice tax’ – games, apparently, are naught but not quite that naughty.

Is this the place that society feels comfortable with video games a revenue generating naughty fact?

No, I think its where politicians feel comfortable with games, as the Gamer Generation (Generation-G if you will) starts to gain power across the corporate and socio-political landscape this othering of gaming culture and it’s artifacts has to decrease.

Yay not a single mention of WoW or Second Life.

Oh.... Doh!

Comments

[Fearless]

1.

Or it could be that politicians have figured a way to dip their grubby paws into our wallets some more by taxing an incresingly popular product in the name of "doing it for the children." How very surprising.

[Dennis Connolly]

2.

One wonders precisely how this will play with the electorate, most notably those who actually engage in video games; even more questionable is how this will actually work in the context of subscription games such as World of Warcraft. Would they only tax the sale of the initial game, or would they attempt to apply that tax to monthly payments? Additionally, how would this affect small studios -- who have enough time drawing crowds with a $20 price tag upon release?

I'd elaborate and elucidate, but my eyes are currently blinded by a rather lovely shade of crimson from the unspoken belief that 'only kids play video games'. Personally, I'd rather see the money go towards state programs which actually have some application -- for example, those which help people deal with gambling and gaming addictions.

[Norman Maynard]

3.

Not an unexpected turn of events, given that the debate over taxing internet sales and the increasing significance of video games as internet sales (both initial purchase over the internet and subscription).

This is definitely an example of the need for good science when it comes to determining the effects of gaming. And of course, demographic studies to put to rest the notion that only 12-25 year old males play.

[Wolfgangdoom]

4.

It doesn't surprise me one bit that a legislator proposed a tax on video games. Anytime a group of individuals become involved in activities that another group-usually the group in power- views as "negative", you are bound to have a tax and I think this happens for two reasons. The first reason is because it is easy to tax something when the tax doesn't apply to you, or if it does, you can easily pay it. And two, because lets face it, there are taxes on everything that can be considered recreational. Boats, Cars, Jetskis, Planes, Homes, all are taxed on top of the taxes you already pay for purchasing said items in the form of licences and "tags". Funny how the united states originally went to war over a tax on paper and tea, but now we are so listless that we pay endless amounts of taxes without question. Just take a look at the amount of money you actually get to keep vs what you make. And I am not just talking about taxes on your paycheck: Purchases, Sales, income, property,sin taxes ect. Do the math, we don't get to keep much. Sounds like another case of if you let us tax you, then we will do it; and use the schools as a reason to make you feel guilty.

[Mia]

5.

Sin taxes are also often (but not always) regressive, in that the people who feel the most "pinch" from them are those with low incomes or on a fixed income. But I don't want to wander into the class-based arguments surrounding taxation. Likewise, when politicians (at least in the US) argue for raising such taxes, it's often to keep such nasty things out of the hands of children. So... kids shouldn't smoke.... let's raise the taxes on cigarettes yet again until they can't afford them. Putting aside the idea that the average gamer is what, 30, maybe that's the ploy. Tax 'em til they can't afford 'em.

[Bart Stewart]

6.

For several years now there has been severe pressure on the Texas legislature to find a "fair" way to obtain and appropriate education funds.

Everything that's been tried has failed for one reason or another -- either the Left doesn't like it because it threatens the power of the teachers' unions, or the Right doesn't like it because it because it's "redistributionist." Any solution has to be something that the governor (a Republican) and the legislature (still skewed to Democrats despite a clear voter mandate toward the GOP) can agree on, which amps up the political maneuvering. Which is related to the savage fight over redistricting in Texas, which is related to the national effort by Democrats to damage Republicans by ending the political career of Tom DeLay (the guy who led the latest redistricting plan that would reduce the number of Democrats in Congress)... and you can see how education spending in Texas gets turned into a political football.

And when (amazingly) something actually gets agreed to, along come various state and federal judges to declare random provisions to be unconstitutional because they don't think it's "fair" enough, and the whole song and dance has to start all over again.

The reason I describe all this drama is to point out that it's not surprising that a Texas legislator is turning to unconventional means of education financing such as a video game tax -- nothing else has worked. The political pressure that Texas voters are putting on both the legislature and the governor to find something, anything that everybody can agree on is becoming extreme.

I could be wrong, but I believe this particular incident may be more about Texas education spending, judicial activism and U.S. national politics than about politicians' understanding of the value of games.

--Bart

[ren reynolds]

7.

Bart > I could be wrong, but I believe this particular incident may be more about Texas education spending, judicial activism and U.S. national politics than about politicians' understanding of the value of games.

Thanks for the context Bart. I see why something came along now but this still does not explain why /this/ came along now. I’m sure there are a gazillion number of things that they still had not looked at taxing and did not choose this time. So if nothing it else they saw the economic importance of games, I’m not sure they are significantly economically important than they were 12 months ago, but now people are starting to notice. I link this with the Business Week cover I wrote about a few days ago, and the Wired special edition. Sure this could be a passing media fad but I’m not sure as when you see the £/$/€/etc that are passing over the counters then they become hard to ignore.

[Bart Stewart]

8.

Good point, Ren.

I have the distinct impression that in this case video games are just percieved as a convenient candidate for fast cash, rather than a primary target in and of themselves. But as you point out, that doesn't answer the question: why video games and not something else?

I'd bet that the right place to look for the facts on this would be at the staff of any politician that pipes up on this subject. These are the folks who really craft policy, and I suspect more staffers these days are of an age that they grew up playing computer games -- they'd naturally be aware the cash cow potential of the industry.

Just another random thought....

--Bart

[Matt]

9.

I wouldn't put much stock in what a bellicose state Senator utters to a local newspaper. They are always giving play to what will get the most exposure and discussion. However, in Texas' case, it would take 180 other legislators to agree or a majority there with since they don't have a 2/3's requirement on raising taxes.

Bart is right in that video games are a convenient remedy. The whole GTA: San Andreas fiasco has left an impression that the industry is violent, over-sexualized and a danger to young kids. In other words, an easy target. My fear would be a tax on any games that are sold, rented, monthly subscribed to or bought and downloaded off the net onto your PC or phone. The revenue would be endless. It's like the "selling lottery tickets" golden egg that alot of states embrace to pay for "education." It sounds great but doesn't do what you think it will.

[Andy Havens]

10.

I think this particular statement is, essentially, political pandering and probably, as stated, un-doable. For example -- would you so tax "educational" computer games? What about used and pre-owned games that have already been taxed once before? And would the store that bought the games back have to pay the tax incoming and outgoing? And what about interactive movie CD-ROMs w/ some "game content?" What about on-line, free games that make their nut from advertising revenue? It's essentially unworkable, and the industry would make the (very valid) point that games are not fundamentally different than other forms of entertainment. Why not tax movies, music and fiction books and have an "entertainment tax" that goes for schools? Why should a gamer be taxed, but a watcher of porn or soap operas not? Feh. It's not gonna happen. It's pandering.

What's more interesting (to me, anyways) is the question of when *gaming* and *gambling* are going to start to intersect for real. When Vegas starts making book on WoW guilds or some such; probably not that, as it's still too wild and wooly to get enough of a fix on. But something akin to sports betting, based on the sheer interest level. Anytime you get enough people spending money to play, somebody will want to make the vig.

Or... when the states that rely heavily on lottery taxes to fund educational initatives (what I've heard called "a voluntary tax on the stupid to help cure stupidity") figure out that online gambling/gaming is eating into their revenue.

There will be tax

[Randy Varnell]

11.

What gets me is the senator says "...You have all these kids buying video games...".

No. It's the parents (like me) buying games, or giving allowance to my kids with which they buy games.

The justification, then, of taking that money and re-attributing it to education (implication: penalize their vice to pay for something beneficial) seems awfully shallow. I may not be a caveman lawyer, but last I understood things, it was my property tax (and I happen to BE a Texan) that paid for education.

My simple question to Mr. Politician: Why tax games, rather than just (I'm not saying this, I'm not saying this) raise the tax you already have for that purpose?

Sin taxes. Pah.

[Amethyst]

12.

In Texas' case, the existing tax cannot be raised because the property tax itself was declared unconstitutional.

Between upcoming elections, the dire state of funding for schools [in two months they have none], and concerns that video games might have undue influence, this makes a reasonable proposal in the lawmaker's eyes. There would need to be a very persuasive argument to explain why not spending a few dollars more on a game is of greater importance than securing money for our schools. How many public figures will be willing to say this is bad legislation?

My fear is that it will set a precedent other lawmakers use to bypass the constitutional challenges limiting or banning video games.

[Scott Shepherd]

13.

There's no way a tax like this should be put on the books. Unlike alchohol or cigarettes there's no proof that theres a harm or burden of cost on society to even remotely consider trying to tax games as a way to recoup state costs for [insert related expenses here].

Essentially it's a double tax on taxpayers already paying income tax, property tax, sales tax, and who knows what else.. when portions of those proceeds already go towards schools which the government consistantly refuses to increase funding to properly run them.

Funding schools should be a burden placed upon all residents that utilize the server, not the parents or children that enjoy one particular form of recreation.

They may as well put a tax on TV's.

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