Potential New Threat to Snack Food Advertising

Today's AAF Government Report brings news of new threats to advertising. Congressman Dennis Kucinich, D-Ohio, sent a “Dear Colleague” letter to other members of Congress announcing his intention to introduce legislation to “eliminate the tax deductibility of fast food and junk food advertising directed at children.” The Congressman is inviting other members to join him as a cosponsor. While well-intentioned, this plan, if enacted would increase the cost of convenience food and restrain advertisers from communicating healthy messages about food.

A misleading statement made by Mr. Kucinich is that snack food advertisers are granted a special tax write off to subsidize obesity, see bolded text below. All businesses have the right under the tax code to deduct ordinary and reasonable business expenses like advertising. To eliminate the deduction for some advertisers but not others would violate those advertisers's Constitutional right to be treated equally under the law, in addition to restraining commercial speech.

Mr. Kucinich's letter follows, as does his aide's contact info. Please let him (and your own Congressional members) know that you do not agree!

Re: Don't Subsidize Childhood Obesity
From: The Honorable Dennis J. Kucinich
Date: 10/28/2009

Dear Colleague:

Research clearly shows that childhood obesity has reached epidemic proportions in this country. As we develop programs to combat childhood obesity, we must also examine the root causes of this problem. The effect of advertising on youth, especially advertising of fast food and junk food, has long been a concern of mine. The Institute of Medicine estimates that in 2004 approximately $10 billion was spent on food advertising directed at children, using every method available--television, radio, the internet, even embedded in video games. Simply put, marketing to children works--companies would not make such a substantial investment if it were ineffective. See n. 1.

Marketing directed at youth is extremely well constructed and relies heavily on behavioral science. The developing brain of the child cannot discriminate fact from opinion; cannot think critically; and cannot yet fully understand abstract thinking. This makes no difference to food advertisers, who exploit this using cartoons, cross branding with popular toys, giveaways, and myriad other methods to develop brand loyalty and shape judgment as early as possible, knowing that those affinities are the most enduring.

Astonishingly, the federal government subsidizes this methodical preying on children by granting a tax write-off for expenses associated with it. (Emphasis added by Ad Disclaimer) This must stop. The government must take action to protect American children and ensure that they grow up in a healthy environment. For this reason will be introducing legislation that would eliminate the tax deductibility of fast food and junk food advertising directed at children. I invite you to join me as a cosponsor of this legislation. There is precedent: approximately 50 countries, including Sweden, Norway, Australia, and Great Britain, have limited or prohibited food advertising directed at youth. Additionally, recent research has concluded that eliminating the tax deductibility of food advertising directed at youth would reduce obesity among youth. See n. 2.

For more information or to cosponsor, please contact Tom Mulloy in my office at 5-5871 or thomas.mulloy@mail.house.gov.

Sincerely,

/s/

Dennis J.Kucinich Member of Congress

n. 1. Institute of Medicine (2006). Food Marketing to Children and Youth: Threat or Opportunity? National Academies Press.

n. 2. Chou, S., Rashad, I. & Grossman, M. (2008). "Fast Food RestaurantAdvertising on Television and Its Influence on Childhood Obesity."Journal of Law and Economics, 51(4), 599-618.

The Threat Returns-- NO TAX ON DTC-- email now!

Senators Al Franken, D-Minn., Sherrod Brown, D-Ohio, and Sheldon Whitehouse, D-R.I., have introduced legislation (S. 1763) to disallow the federal tax deduction for all advertising and marketing expenses for prescription drugs. The Senators have indicated they would like to have the proposal added to the health reform legislation and may offer it as an amendment when the measure is considered by the full Senate.

Please contact both of your Senators as soon as possible and express your strong opposition to any effort to deny the deductibility of advertising expenses. Talking points and contact information are both included.

Here's the rest of Clark Rectors' message. Suggested email text is below.

You know the drill:

Contact Senator Mikulski here.

Contact Senator Cardin here.

Dear Senator _________:

As a taxpayer working in Maryland's advertising industry, I oppose any effort to eliminate tax deductions for the cost of advertising prescription drugs. There are several compelling reasons NOT to eliminate the deduction of advertising prescription drugs as ordinary and necessary business expense:

• It will increase the cost of informing the consumer about prescription drugs by 35%. If an advertiser is taxed at the highest corporate rate of 35%, the loss of the deduction for prescription drug advertising becomes a 35% tax on such advertising.
• Taxing advertising expenses for prescription drugs but not other advertising expenses is discriminatory.
• Taxing advertising expenses for prescription drugs chills constitutionally protected commercial speech. In 1936, the Supreme Court struck down a 2% tax on newspapers as an unconstitutional restraint on speech in Grosjean v. American Press Co.
• Consumers - particularly elderly consumers - will receive less information about prescription drug choices if advertisers reduce spending on prescription drug advertising.
• Legislation requiring a tax on advertising expenses for prescription drugs will make it easier to tax other advertising expenses, adversely affecting the advertising industry.

Advertising for all products and services helps generate $6 trillion in U.S. economic activity and supports more than 21 million jobs. I request that you do not support any legislation that eliminates tax deductions for the cost of advertising prescription drugs.

Sincerely,

Your Name
Address

Advertising Squeezed by States Looking for Funds

Monday's Advertising Age features a 50 state survey on state legislative initiatives to raise funds from or otherwise regulate advertising and production activitities. AAF Baltimore is the only club noted for having a legislative committee --and a climate that is, at times, less than welcoming to advertising and communications businesses. Want to help change the climate in Maryland for advertising and communications businesses? Contact Linda Stanley, director AT baltimoreadvertising DOT com or 410-821-6968, about volunteering on AAF Baltimore's Legislative Committee.