What if we taxed advertising?

> I worry about "tax thing I don't like" policies

Equating "things I don't like" with "negative externalities" does not seem like a helpful framing for this discussion. I personally like traveling around the world and eating avocados, but they have substantial negative externalities. I personally dislike watching ballet or eating mushrooms, but they have minimal negative externalities.

Advertising may very well be something that the author dislikes AND that has negative externalities, but the point of a Pigovian tax is solely to apply a price commensurate with negative externalities, not the dislike.

> you to some extent want that activity to occur otherwise you've got budget issues

Perhaps, which is why he mentions "freebates", and why I find revenue-neutral Pigovian proposals like the "carbon-fee-and-dividend" so compelling. The primary purpose is not revenue, it is to ensure the correct price on negative externalities so society can rely on a free market to solve tricky allocation problems.

It is not tax "things I don't like".

It is tax things that has macro dynamic negative externalities.

And subsidize things that has positive macro dynamic externalities.

The thing economists generally say to do, is to take the revenue from Pigovian taxes and use it to somehow offset either the original negative externality (e.g. using tobacco taxes to fund public health measures) or anticipated damage caused by the tax itself (e.g. using carbon taxes to fund public transit). In either case, in theory: if nobody pays the tax, then you no longer need the revenue.

Not to imply that economists are uniform on this or necessarily correct, but there has been work done here.

It could be more a subtle change. Instead of taxing advertising, what about stop advertising costs from being counted as business expenses. You can spend all you want but you can't claim that cost as an offset to revenue. Doing this now amounts to a subsidy on advertising, so just remove it.

> you to some extent want that activity to occur otherwise you've got budget issues. Now what is the incentive?

I was just talking with some friends recently about an instance of this: distilling, which is still federally illegal in the US for the primary reason that it provides a lot of tax income if you charge for licenses and tax sales, which is incredibly frustrating because it's easy and safe to make yourself high-quality liquors at a fraction of the price that you'd pay at the store and have a fun hobby to boot.

(pedants: please don't bring up safety issues - it's trivial to realize with five minutes and internet access that distilling isn't significantly less safe than many other unregulated activities in the world as a whole)

Like how whenever they want to introduce gambling, they always tie it to school funding, as if magically, it’s the only way to pay for schools

We could start by not having a bulk rate for ~spam~ snail mail. Charge them double, perhaps. Especially political.

> Because all their competitors have to pay the same tax, it's just a status quo.

That may be correct if every company spends similar amounts on traditional advertising, but this isn't true. In reality, such a tax would hit companies with larger traditional advertising budgets harder, and make some companies choose to shift some of their marketing spend to other communication methods.

For example, I work for a company that has a small advertising budget with no traditional advertising. We have a website, publish papers, and occasionally have a booth at a conference. Some of our competitors have significant advertising presence in trade magazines, social media, news sites, etc. Therefore this tax would impact them more than it would impact us.

More importantly for the purpose of the tax, it might shift our competitors' behavior. Ad buys that were of marginal utility to the company before would be even less cost-effective so either advertising platforms would lower their prices or the company would not buy the ad. In some cases this lower price would make it no longer profitable for the platform to display, eliminating the ad enteriely.

I concur. At no point does the article suggest that taxing would reduce advertising, or improve existing advertising in any way.

Plus, of course, the proposal is simplified, and much hand-waving about the details. Who to tax, for what, when, how much etc are all details needing attention.

Already exceptions are proposed. Hint - the exceptions will favor big corporate, against the little guy, not the other way around.

To your point, I think it would entice regulatory arbitrage, where companies will appear selling "influence positioning" (or whatever the term they come up with) that acts as advertising but hasn't yet been categorized in the eyes of the law.

This tax was introduced as a straightforward way to actually get tax revenues out of a multi-billion dollar industry that does not come remotely close to paying its fair share of tax in the UK.

The digital services tax was a limited counter to aggressive tax avoidance by US multinationals. Unfortunately, even though it's peanuts in the grand scheme of things, it's looking like it'll get offered up as sacrifice to the King in Orange.

UK corporations are expected to pay ~20% corporation tax, individuals pay _substantially_ more on their incomes. We've got a generation that've had to endure continual cuts to public services because "there's no money left", whilst foreign corporations make money off our public virtually tax free.

Google, Facebook etc., should pay their way or get out of our market.

We should outright forbid it in public space. IHMO.

Also I'd say lets only tax undesirable behaviour!

So not tax:

* wages

* having a house

* adding value (VAT)

But so tax:

* land use

* polluting

* packaging (could be part of polluting)

* accumulating profits at the top

This idea has some similarities to:

https://en.wikipedia.org/wiki/Georgism

I love seeing the anti-advertising sentiment bubbling up. Social media addiction, 24 hour political news bubbles, pharmaceutical companies spending more on ads than R&D, consumership-based lifestyles, etc. All of it is driven by advertising being an acceptable business model. And we haven't even touched on the aesthetic crime of fucking ads being pasted on every surface in public.

But here's a different take: unsolicited advertising is theft. It is the "fractional penny" heist perpetrated by the industrial advertising complex upon all of us, all of the time.

Hear me out. You have a finite amount of mental attention that you can give in any given environment. Advertising companies are selling access to bits and pieces of this finite resource of yours. Sometimes they do this with your consent in advertising supported products you seek out (e.g. free YouTube or Spotify) and this is fine.

But often you have not consented to spend your attention on their ads. You probably weren't laying on the beach, staring into the sky hoping to find the phone number of a personal injury attorney being towed behind an airplane. Or the latest weight loss drug plastered on the side of a city bus. Or 15 garbage pamphlets jammed into your mailbox.

There's a reason all the dystopian, sci-fi media shows the beleaguered protagonist assaulted with personalized ads in holograms and on every surface. Because that is exactly where we're headed just as soon as they figure out how to do it if we don't legislate this shit away.

At this point next week there will be an article titled “What if we averted our eyes from advertising?”

> consumption is driven by advertising

I thought this, too, but I can't find data to support the idea.

Hollywood already does this, when your movie gets greenlit you go into debt with the other arm of the company for marketing.