February 8, 2006
Tax Policy, Car Ads and Warning Labels
image from carbusters.org
A fellow wonk recently passed on this article to me:
"On the Road Again: How Tax Policy Drives Transportation Choices" by Roberta F. Mann. You can find it online here (you have to jump through some hoops to read it).
It catalogs a whole range of tax policies that favor automobiles (indeed more than any other vehicles, SUVs and Hummers) over other modes (and you can count policies in the other direction on one hand with lots of fingers left over). One in particular stood out for me: auto advertising is allowed as a tax deductible expense.
So all those car ads (you know, the ones with a single car out on the open road) trying to program us to love our cars, are being subsidized in part by our tax dollars.
This was reinforced for me by a discussion over on the car free network listserv about the same topic. One of the proposed antidotes: put a "Surgeon General's Warning" on cars (at least on the stickers) detailing the impacts on air quality and risk of accidents.
I'm not holding my breath, but the idea makes me smile.
February 8, 2006 4:50 PM
Bob R. Says:
One in particular stood out for me: auto advertising is allowed as a tax deductible expense.
Chris - how does this favor cars over other modes? I'm don't understand.
Virtually all business advertising expenses are deductible. Bicycle companies that take out automobile ads can expense the costs. Airlines can expense their advertising costs. Private transportation services (taxis, flexcar-like systems, shuttle buses) can expense their advertising.
Transit systems run by governments, strictly speaking can't "deduct" advertising expenses, but these same entities generally don't pay income taxes in the first place.
Is there something particular in the tax policies that gives car advertisers an extra boost over other companies that wish to advertise?
Furthermore, advertising can be a two-way street. Companies can advertise on transit and deduct these expenses while providing income to the transit agency. (I'm actually not in favor of expanded on-transit advertising, but you get the idea.)
Regarding placing warnings on window stickers, if you can find the room (have you seen how much stuff is on window stickers these days?), I'm all for it.
- Bob R.
February 8, 2006 8:56 PM
Chris Smith Says:
Bob, I think I could make a case for removing the tax deduction for a LOT of advertising (maybe anything beyond here's where the store is and our hours are...) on the basis that it's a subsidy on promoting consumerism.
But specifically to autos, if you compare them to the consumer cash flow stream on any other form of mobility, there's MUCH more spent on advertising. Just to takes bikes as a comparison, a bike costs not more than 10% (probably less than 5%) of what a car does, so vehicle-for-vehicle there's a 10x subsidy for cars assuming an equal percent of the sales price goes to advertising.
February 8, 2006 11:54 PM
Shoot, the federal government actually subsidizes - pays for itself - advertising promoting US products in other countries, such as Florida Oranges.
I think California does too, but I'll let someone else use google for once. =)
February 9, 2006 10:06 AM
Scott Cohen Says:
I was able to get the article electronically through PSU's library. If you are unable to access PSU's electronic database (you've got to be a student or an alum, I think) you can email me and I'll email it to you. If you want I can send another attachment with the footnotes, but I cut them off because they were 59 pages long. Ahhh, the joys of reading law review articles. Please email firstname.lastname@example.org if you're interested.
August 21, 2006 4:45 PM
Roberta Mann Says:
Hi all, very pleased to see that someone read my article. I can send it to you electronically if you wish, you can even post it on the site. In my electronic version, the notes are endnotes, so you can just not print them if you don't want to kill a lot of trees.
August 21, 2006 6:24 PM
Ross Williams Says:
I would encourage Chris to print the whole article. I think it would be a good discussion. I agree its a stretch to call advertising deductibility s subsidy. But it is a tax policy that encourages promotion of automobiles.