fbpx
Politics Foreign Affairs Culture Fellows Program

Is Advertising Free Speech?

Revolt on the Hill as GOP considers ad tax changes.
Screening Liberty

We are led to believe that standing up for the Constitution and limiting the tax burden on citizens were Republican tenets. Unfortunately, members of the Republican Party are the ones now considering to stomp on both the First Amendment and the American entrepreneur by changing the way we expense advertising costs.

Ways and Means Committee Chairman Kevin Brady (R-TX) is reportedly contemplating the adoption of former Republican Rep. Dave Camp’s 2014 ad tax proposal, in which commercial advertising would no longer be 100 percent deductible as a business expense—as it has been since the creation of the federal income tax. Instead, it would be 50 percent deductible, leaving the remaining to be amortized over a decade. By holding corporations’ money for an entire decade, this new tax would treat ads as an asset like machinery instead of as a business expense like research and wages.

I know accounting can be boring, but these are fighting words!

In singling out free, commercial speech from other business expenses, this 50/50 proposal is in clear violation of the First Amendment. After all, the reason commercial advertising has been fully deductible since the income tax’s founding in 1913 is because Congress has always known that it cannot constitutionally regulate free, commercial speech by making it a dollars and cents game.

The American Revolution was largely fought over this very issue. Remember the Stamp Act of 1765? The relationship between England and the Colonies was strained already when this tax pushed it to a boiling point. The Stamp Act imposed an across-the-board flat tax on advertising. It levied a tax of two shillings per ad no matter what it was or where it was being printed. Mob violence was triggered. Stamp collectors quit in fear and the British government repealed it a year later to quell the violence, but the goose was cooked. War was on the horizon and the Stamp Act was a rallying cry for the colonists.

After the British were defeated, our Founder’s set up a form of government with a Constitution in which the First Amendment prevented the government from ever taxing advertising again. Freedom to advertise: “Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof; or abridging the freedom of speech, or of the press…”

For centuries, the First Amendment has protected corporate advertising, which goes hand in hand with our formidable entrepreneurial spirit. Businesses must advertise to succeed—in fact, advertising spending generates approximately 16 percent of the nation’s economic activity. Do the Republicans really want to be the party to tax that?

From Constitutional scholar Bruce Fein:

Commercial speech is protected by the First Amendment. In overturning a prohibition on legal advertising in Bates v. State Bar of Arizona (1977), the Supreme Court reaffirmed that free speech includes paid advertisements or solicitations to pay or to contribute money. The Court elaborated on the consumer benefits of commercial advertising:

“The listener’s interest is substantial: the consumer’s concern for the free flow of commercial speech often may be far keener than his concern for urgent political dialogue. Moreover, significant societal interests are served by such speech. Advertising, though entirely commercial, may often carry information of import to significant issues of the day. [citation omitted]. And commercial speech serves to inform the public of the availability, nature, and prices of products and services, and thus performs an indispensable role in the allocation of resources in a free enterprise system. [citation omitted]. In short, such speech serves individual and societal interests in assuring informed and reliable decisionmaking.”

A Republican-controlled Congress would go down in history as the party to regulate our First Amendment right in such a way as to extort more from the already burdened American businessmen and women.

Recently, a coalition of 124 House members, led by Reps. Kevin Yoder (R-Kan.) and Eliot Engel (D-N.Y.) sent a letter to congress urging them not to mess with the current tax treatment of advertising.

Will Congress heed the warning? Only time will tell.

Steve Sherman is an author, radio commentator, and former Iowa House candidate. His articles have appeared nationally in both print and online. His most recent novel, titled Mercy Shot, can be found on Amazon or at www.scsherman.com

Advertisement

Comments

Become a Member today for a growing stake in the conservative movement.
Join here!
Join here