I hate it when I’m right. That’s because the shit I predict is always so dire. The downfall of Mass Marketing. The crash of the “New Economy.” The dawn of the “Post-Advertising Era.” It goes on and on. The last one was in February of 2008. “By June, today's audience playbook will be archaic. I'm figuring two total rewrites between now and summer. And summer? Don't even get me started about Q3/08.” So that egg dropped right on time: "The Great Depression II". Now my biggest concern of all is coming to pass.

The Ad Tax.

I stood over on the pages of AdvertisingAge.com waving my red flag about the “diversity” issue as a precursor to a much larger issue: minority voters finding out Madison Avenue’s dirty little secret and making them pay by voting in an advertising tax. Now, in addition to the one that had both the ANA and the 4A’s up in arms in South Dakota, there is a new one in New York State.

The bill in the South Dakota House of Representatives that would impose a 4% gross receipts tax on all advertising services in all media (House Bill 1266) was defeated this past Feb. 19th by a 9-5 vote in the Taxation Committee. The ANA had written to all of the members of that committee expressing their opposition to the proposal.

Two product-specific ad tax bills have been introduced in the New York State Assembly. Assemblyman Richard Brodsky has introduced AB5030, which would eliminate the corporate income tax deduction under state law for the costs of any DTC prescription drug advertising. Assemblyman Felix Ortiz has introduced AB2455, which would prevent companies from deducting from income the New York share of expenditures for advertising food, video games and equipment, movies, videos or DVDs on TV shows watched primarily by children under age 18.

This is the second round of ad tax initiatives to raise their surly heads. The recent passing of an advertising tax in Florida has serious ramifications for all publishers, regardless of their size and their location. The most obvious will be the law's effect on the bottom line. In addition, the bookkeeping involved to track this tax is onerous; small publishers in particular-- those with fewer resources and who are less automated--will find it especially difficult to track the Florida tax law. Of course this is a visit from the Florida Ad Tax movement that the industry galvanized against 21 years ago. Not so much this time.

Although taxes have always served to monetize the process of government, they also serve to change the behavior of businesses and consumers. The economic theory is that by applying taxes to activities which are harmful to society, taxation can be used to improve society. Known as Pigouvian Taxes, these “ taxes on bad things" reduce the level of the harmful activity, as well as reduce the need to tax other “good” things such as work or investment.

How does advertising put its best face forward? The current “diversity” issue doesn’t put the industry in the best possible light with minority voters. New York, Miami, oops. Then there is the fact that most advertising is just plain annoying. I would vote for less of that OxyOrange guy screaming in my ear. Enduring dreck for the sake of free content is fast becoming null and void as audiences stream to the Internet.

The Ad Tax is just one more plague upon the house of traditional advertising. A house that’s burning, with no water in sight. Wait for it… wait… for… it… Save for NeoAdvertising.
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