When developing a game, American game designers often weigh the advantages of printing locally in the United States with printing overseas. Overseas printing is usually cheaper, but slower to produce. For small companies or individuals fulfilling their first Kickstarter campaign, this can be a simple decision to make. For larger companies, overseas printing can result in substantial savings as current U.S. corporate tax laws can allow toy and game manufacturers to deduct the cost of imported goods from their profits. But a proposal to apply a broad adjustment to tax law would strip larger companies of that ability.
“The border adjustment, part of the Republicans’ plan for a revamped tax system, would apply taxes based on where a product is sold rather than where it is made or where the maker’s operations or executives are based. Imports couldn’t be deducted as a cost of doing business, while exports would be exempted,” reads an article published in the Wall Street Journal. Timothy Conder, a toy-industry analyst for Wells Fargo, stated that Hasbro generates about half its revenue domestically but manufactures about 95% of its product overseas. Under a worst-case scenario, he estimates Hasbro’s 2017 earnings would drop from $4.76 a share to $4.14 with the tax code change.
Additional reporting can be found at The Wall Street Journal.