Government officials are wracking their brains (hopefully) over how to close the gaps in their spending budgets. From the state level to the federal level, officials and politicians are facing tough decisions about which matters are crucial and which ones are not. The issues that are important will be included in those budgets, and politicians need to find the money to be able to provide them.
Government and business have a very interesting relationship. Not only can government be one of the biggest players in the business world, government can also be one of the biggest headaches. Unfortunately, we have to cover an issue that resides in the latter part of the spectrum.
It is being reported that not just the federal government, but nearly 35 states across the United States, are considering implementing a tax on advertising spending. As many of you have been taught or come to realize while practicing, advertising is not some additional benefit when being in business. No, advertising is a cost associated with doing business. Advertising can be likened to costs associated with capital expenditures and other costs that are incurred due to the action of being a business.
The No AdTax Illinois group is currently facing off against its State Legislature. The Gazette Chicago reported a case of the ad tax passing in Florida some years ago. The result? The article reports that 50,000 jobs were lost, advertising revenue fell $100 million dollars, and the services necessary to implement the tax cost more than the actual tax revenue, failing the cost/benefit analysis most business professionals would examine before making such a move.
The tax was repealed six months after it had passed.
"Those who fail to learn from history are doomed to repeat it." Don't be those guys, Illinois.
Though we do not feel the excessive amount of pressure to deliver services based on budgets that seem to shrink every year…
Wait, yes we do. Never mind.
As the advertising industry continues to flourish, and get back to numbers it once experienced before the Great Recession, now is not the time to implement an advertising tax. If the U.S. truly wants to create the business-friendly environment it claims to provide, choosing against an ad tax would be an action that speaks louder than the rhetoric.
Be those guys, Illinois.
As for the other states and the U.S., we know that you have constituents that refuse to pay more themselves for the services they want the government to provide. We understand that sentiment. But let our advocates — the ANA, 4A's, and AMA — educate you and the public about why an ad tax is not the best alternative. Let us be partners in examining how governments can close budget gaps while leaving AdLand unharmed.
*As a reminder, the thoughts and opinions of this post reflect that of the author and not of Talent Zoo Media. Deal with it.
Dwayne W. Waite Jr. is partner and principal at JDW: The Charlotte Agency, a marketing and advertising shop in Charlotte, NC. He enjoys consumer behavior, economics, and football.
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