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Americans Paid $228 Million For Activision Blizzard's Tax Credits In 2018

Activision-Blizzard received more in tax credits than Amazon in the year prior to the gaming company cutting 800 jobs.

The end of the year is coming, and we Americans are all doing the math on how much we’ll dish out to the government come April. But it turns out that, if you’re a dedicated gamer, you’ve probably already paid your dues to one more entity you engage with regularly: Activision Blizzard. Even if you didn’t touch a single one of their games, at least some of your money has found its way to Activision Blizzard in the way of massive tax cuts. In essence: you, your friends, your family, and most U.S. citizens paid Acti-Blizz oodles of money for basically no reason — likely without even realizing it. Yay!

According to public federal tax filings, in 2018, Activision Blizzard didn’t just completely avoid paying taxes in the United States of America. The company received massive tax credits totaling $228 million. Given a profit of $447 million, that’s an effective tax rate of -51 percent. Yes, that’s a “negative” before the number.  And yes, that adds up to more than half its profit for that year.

It’s worth noting that companies far more infamous for their tax avoidance received less than Activision Blizzard’s $228 million. Amazon received $122 million in such “reimbursements” and Netflix was “only” paid $22 million. Corporations that received more are more longstanding organizations, such as IBM with $342, Prudential Financial with $346 million,  and tractor (and other farming equipment) manufacturer Deere with $268 million. There are also several energy companies with similar returns.

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The Institute on Taxation and Economic Policy listed Activision Blizzard as one of 60 companies under the Fortune 500 that not only avoided paying taxes, but also, through tax code loopholes, received such tax credits. This was in light of 2017’s massively controversial tax break bills pushed through Congress.

Yes, they do pay plenty of federal taxes — on paper, they still have a 21 percentage tax rate, for $394 million. This was the new tax rate under the U.S. Tax Reform act in 2017. But tax code old and new does factor into how much net they receive.

In Activision Blizzard’s case, it at the very least exercised a claim of $58 million of stock option tax breaks. In short, if they provide their employees with stock options, as simply put by Investopedia, “the difference between what employees pay for the stock and its market value can be claimed for a tax deduction.”

It received tax breaks in the form of “research and development” credits, amounting to about $46 million. (Other developers: it might be time to lawyer up about that particular credit.) Part of the remaining money comes from some audit settlements. There’s also a jump of $285 million in credits thanks to the Tax Reform Act (though it looks like it threw in some deferred taxes the year before in part due to the code).

In addition, like many, many big companies, the Activision Blizzard “corporation” is technically in Delaware — where there’s no corporate tax for incorporating, plus plenty of incentives for moves such as stock options. In state taxes, they received $15 million in credits.

These credits are probably not for need alone. Blizzard claimed a very, very successful year in 2018. In fact, during its 2018 fourth-quarter earnings report, it claimed that 2018 was its most successful year, with $7.26 billion dollars in physical and digital sales. Yeah, that’s a “b” before the “illion.”

Regardless, it predicted that revenues would go flat once Bungie’s Destiny franchise split off from the company. In other words, record sales and $228 million in tax credits didn’t stop Activision Blizzard from laying off over 800 staff in February in a move to save some more profits.

With class controversies at their hottest, we’ll probably be seeing more companies called out for tax avoidance, even beyond the Fortune 500. Whatever the final outcome, we here at Fanbyte agree: fuck Activision Blizzard.

Disclaimer: Fanbyte is owned by Tencent, which has a partial stake in Activision Blizzard. However, we’re entirely editorially independent from any game development company affiliated with Tencent, so CLEARLY, that’s not gonna stop us from our fair share of disgruntled class consciousness reporting. 

About the Author

Victoria Rose

Victoria is a Brooklyn-based, chaotic-good former dungeon master and a Contributor-At-Large for Fanbyte. She's a self-proclaimed esports pundit, and used to do Dota 2 news and reporting as a full-time part-time gig. She's also four red pandas stacked in a hoodie. [she/her/hers or they/their/theirs]