States May Tax Advertising: Is It Smart?

With the belt tightening on state and local budgets across the United States, elected officials are exploring myriad “creative” ways to increase tax revenues.

One such proposal, however, is generating substantial controversy according to AdAge.

Desperate for cash, the governors of Ohio and Minnesota are eying a tax on advertising. And even as agencies, broadcasters, newspaper publishers and big advertisers prepare to push back, there is concern that such moves could not only pass, but spread to other states and to the federal level.

Not surprisingly, there has been resistance to the concept of advertising taxes among marketing and advertising professionals. Dan Jaffe, executive VP of government relations for the Association of National Advertisers, for example, is opposed to the effort.

He believes taxing advertising is “counterproductive.”

“The whole purpose of advertising is to generate sales,” Jaffe tells AdAge. “So if you’re becoming more reliant on sales taxes, you shouldn’t be doing anything to stop an effort to sell.”

Interestingly, the prospect of advertising taxes has gained bipartisan support, which means blame for their establishment won’t fall on just one political party.

Do you support advertising taxes at the state or federal level? Or will this be bad for business? Please weigh in with a thought or comment below.