Editorial: Taxing advertising a bad idea

Talk about it

There are plenty of reasons why Gov. Mark Dayton's expanded sales tax plan can be criticized (the Minnesota Chamber of Commerce column also being published today offers a healthy sampling). The state's media outlets are particularly concerned about one aspect of the governor's proposal, and with good reason.

By applying a sales tax to the purchase of advertising or related services, Minnesota would be enacting something currently not done in any U.S. State. Two states have previously had such laws; they were quickly repealed. Why? It can be difficult to determine just what counts as advertising and what doesn’t, and besides, the impact of such tax would almost certainly be too great.

Just what might the impact be? One distinct possibility is that major Minnesota companies that spend significant dollars on promotions across the state might move their ad agencies — and purchases — somewhere else. In-state advertising buys would almost certainly decrease, which would result in countless dollars in lost revenue.

Newspapers, of course, rely heavily on advertising to remain operational, as do other forms of media. But think about where else there’s advertising — of course, it’s everywhere. From the boards of the local hockey rink to inside a high school yearbook, from a promotion on a bowling alley’s automatic scoring display to (for instance) a King Turkey Day T-shirt, advertising is omnipresent — where would tax collection start and end? And how would any advertising regulations related to the Internet be enforced?

State legislators shouldn’t have to tax their brains, so to speak, too much to realize the folly of this proposal.

Tags: opinion, minnesota, politics, dayton, legislature