The Biggest Threat to Our Business … Hovering and Heinous
In the world of fiscal policy – if there’s a public or private behavior that has a disagreeable effect, then government has a tool to move behavior to a desired effect: taxation.
If the world has too much global warming, then tax fossil fuels and carbon emissions.
If smoking causes cancer, then tax cigarettes.
If alcoholic consumption brings on social ills, then tax wine and spirits.
If the world is becoming more unequal, and the middle class is under threat, then tax wealth.
But if the world has too much economic activity … why would that not be only a good thing?
In the United States (and probably elsewhere), the trouble with taxation — unfortunately, moral judgments aside — is that it is used too often for another objective: simply feeding the government leviathan. Failure to curb public spending, excessive entitlements and inefficiencies result in public debt and harrowing deficits – and a need for government to raise revenue anywhere it can.
But what if raising those taxes works against an overwhelming public good — that of economic growth that spurs even more government revenue? What if jobs, sales, manufacturing, services, the business of business, were all under threat by such a move?
Shouldn’t such a tax proposal be rejected on first consideration? How could such a proposal ever be offered in the first place?
Say hello to today’s U.S. Congress. Right now, in key House and Senate committees that consider taxation, budget and appropriations, is an idea that would be nothing short of ruinous to advertising and marketing: the removal or reduction of tax deductibility for advertising expenses, or the amortization of those expenses over a long period of time, far beyond advertising’s more immediate and practical impact.
Just more than a century ago, the federal government enacted an advertising expense tax deduction – rightly understanding that advertising activity spurs economic growth. That in turn creates jobs, sales, tax revenue, and other beneficial effects that lead to a virtuous circle of positive effects. I congratulate our policymakers … of 1913. That decision literally helped create a golden era for advertising – which helped produce the world’s most successful economy ever known.