The company behind Call of Duty scammed American taxpayers in 2018.
A new study by the Institute of Taxation and Economic Policy has revealed that Activision is among the many Fortunte 500 companies that not only paid no federal income tax in 2018, but received a $228 million dollar income tax refund on behalf of the American tax payers. You read that right. Not only did Activision not contribute to building roads, bridges, broadband infrastructure or giving federal employees a raise like you and I did, but they received $228 million dollars of money back from the federal government. Money that people like you and I, paid in taxes. Let’s take a look at how this happened and just how unjustified it is.
If you’re unfamiliar with Activision, they are the company behind billion dollar videogame franchises like Call of Duty, Destiny (Until 2019) and more. They merged with Blizzard Entertainment a while back, bringing other mega-popular franchises like World of WarCraft, Overwatch, StarCraft and Diablo under the same roof. It goes without saying that Activision has been bringing in money hand over fist, year after year, even going so far as to boast of record high revenues this past year. So how does a company that is raking in all time high revenues get away without paying a dime in taxes?
First and foremost, like many companies, Activision uses off shore tax havens to hold its money. It appears that Activision assigns its intellectual properties to a shell corporation that they own in Holland. So technically, Activision doesn’t own Call of Duty, which obviously has a multi-billion dollar value. Instead it is owned by a dummy corporation in Holland that has no employees and performs no activity whatsoever; What this means is that Activision doesn’t need to pay taxes on the value of the Call of Duty property itself because they don’t own it. It is owned by their shell corporation, which doesn’t have any income. It then licenses its multi-billion dollar property to Activision. While I cannot find data to indicate how much Activision pays its shell corporation for the use of the property, you can be sure that it’s a pittance in comparison to its worth.
Beyond that practice, Activision received a massive boon from the changes to the American tax code passed by Congress in 2017 and signed into law by Donald Trump. Under the new tax code which awarded a more favorable tax rate to corporations and by utilizing loopholes in the tax code (Most of which likely existed long before the 2017 amendments, to be fair), Activision was able to avoid paying any federal income tax and was even granted a $228 million tax refund on behalf of the American taxpayers. Some may say, “Perhaps they contributed to the economy in other ways such as creating jobs?” That can’t be further from the truth.
Activision laid off 8% of its work force during the same fiscal year that it boasted of record revenues. What this boils down to is 800 or so employees being left without jobs. Activision didn’t create jobs, they cut them. No argument can be made for them stimulating the economy, because they didn’t. It really is that simple.
Believe it or not, it gets worse. Just this year, Activision repeatedly lashed out at those who play and support their own games like Hearthstone for expressing their thoughts on repression by the Chinese government. Activision made it as clear as day that they would rather protect their profits than stand with free speech principles. Instead of taking a moral stand, Activision banned one of Hearthstone’s professional players and took away his tournament winnings because he spoke out against the government of China, which is known for standing in direct opposition to many American principles. Activision continued to make matters worse by banning anyone who spoke up in Twitch chat with similar expressions, all because they fear the backlash of the Chinese government. In short, Activision is trying to make sure that you don’t think that the Chinese government is “the bad guy” so that they can continue to break revenue records, fire American employees and avoid paying federal taxes.
This should outrage every American taxpayer and if it doesn’t, I suggest that you stop shrugging this nonsense off. You and I pay our taxes. Mom and pop shops pay their taxes. Why in the world should a locally owned business struggling to survive pay their taxes but corporations that give million dollar bonuses to their CEOs, cut their work force and clamp down on freedom of speech within their own communities receive money from the American taxpayers? They absolutely shouldn’t. It doesn’t make economic sense and its not in like with morality on any scale.
I keep hearing people go on fearful rants about socialism but I would counter that with a question; What do you call this? What do you call the American government collecting taxes and then handing it out to companies like Activision? Is that not redistribution of wealth in the worst possible way? Not only is Activision not investing in America by failing to pay any income tax at all, it is getting handed your money and it’s all completely legal. If you look at this company’s behavior and you’re be “OK” with it, then I suggest that you hold yourself to a higher standard. Tax avoidance isn’t smart, its immoral and its unfair to those who do pay their taxes in good faith.
This is just one example of the many companies who are gaming our tax system. We can do better than this in America. This should not be and cannot continue. We argue about what tax rates should be for different incomes levels but before we can make sure that the playing field is level, we have to make sure that everyone is the field at all. Multi-billion dollar corporations need to be held to a higher standard. The American taxpayer cannot continue to subsidize companies that roll around in billions of dollars by developing digital products in America, selling them to American consumers and then lay off the very people that made it all possible. It’s not right on any terms and it needs to stop.
