ANA Responds to State Ad Tax Bills

At least forty states are facing serious budget pressures.  While the federal stimulus bill signed yesterday by President Obama will relieve some of the pressure, many states will still need additional revenue to balance their budgets.  That could be bad news for the marketing community as states may consider taxes on advertising or other business services to bring in more revenue.  Ad tax bills have already been introduced in two states, South Dakota and New York.  The South Dakota bill (House Bill 1266) would impose a 4% gross receipts tax on all advertising in all media.  The bill in the New York State Assembly (A5030) would disallow the corporate tax deduction under state law for all DTC advertising.  Both bills are bad public policy and the New York bill raises serious First amendment concerns by singling out one category of advertising for differential tax treatment.  The US Supreme Court has consistently stated that taxes or other burdens on speech due to its content are unconstitutional.  Also, DTC advertising often provides life-saving or health-enhancing information to consumers and encourages them to see their doctors for needed health evaluations.  We have written to the members of the Taxation Committee in the South Dakota House opposing that bill.  We are also working with member companies and other industry groups to respond to the DTC bill in New York.  In this very difficult economic climate, this is absolutely the worst time for states to make it more expensive for marketers to communicate with consumers.