Advertising tax credits? I don’t think so

Bob Pittman is a really successful entrepreneur and business executive. And I concur with his premise in this Fortune.com piece that advertising can help stimulate consumer spending. (Isn’t that typically the purpose of consumer advertising?)

But his suggestion that advertising expenditures, already a deductible business expense, should be rewarded with additional “tax credits” is wrong on so many levels, it’s making me dizzy just thinking of them. Frankly, the proposal seems so half-baked, I don’t want to waste much time in refuting it, but here are just a few things wrong:

1. What is advertising? Is he talking about actual media costs or does he think tax payers should be subsidizing creative costs? I could dig deeper into this and ask what type of focus groups should be subsidized or, perhaps, what about the catering costs at a Budweiser photo shoot? What about other marketing expenditures that can help stimulate the economy. Stuff like logos printed on refrigerator magnets? Or Google search ads? Should the government be subsidizing those?

2. What advertisers? Using the same example, should the government subsidize Budweiser advertising? Beer is a big seller during economic downturns, sure, but do they really need tax-payers subsidizing their advertising budget?

3. What about the whole notion of free markets, competition and capitalism? Has the past six months of government bailouts so corrupted our sensibilities that we are now at a place where we can conceive of tax payers subsidizing anything? Is advertising too big to fail?

4. Aren’t tax payers already subsidizing advertising? I see ads for Bank of America and Citi and an whole range of TARP recipients all the time. And GM. I could go on. They’re spending lots of bail-out dollars on advertising.

Despite the fact the business I own would directly benefit from policy providing tax credits for advertising expenditures, I can’t see a way I would ever back such a policy.

  • I don’t think that increasing demand would help the economy because people are afraid to spend or don’t have the funds because they have lost their job.