Advertising provides an immense boost to local, regional and the national economy. According to a study by IHS Global Insight advertising contributed to 19% of the nation’s total economic output in 2014. Every $1 million spent on annual advertising expenses supports 67 American jobs. Thus, advertising supported 20 million or 14% of US jobs. But pressure to meet state and federal budgets without raising the tax rate has some looking for new revenue sources.
Some have pushed for taxes on advertising to generate revenue. Yet the IHS Study economic model also predicted that every 1% increase in advertising cost results in a 1.2% drop in ad spending. A tax increasing the cost of advertising would reduce ad spending, reduce economic output and reduce jobs.
Taxing advertising has been tried before and it failed so badly that a state law was repealed within one year. But some still push it in various forms in an attempt to generate more tax revenue.