Friday, June 25, 2004

Taxing Advertising

An interesting article over at Kuro5hin, whose thesis is that advertising imposes costs upon society and should thus be taxed accordingly. Here's an overview, which I've actually taken from the article's conclusion (and broken up into separate paragraphs by me):

...advertising imposes costs upon society and should be taxed accordingly. Some of these costs are well known, e.g. annoyance and loss of time and can be accepted provided that consumers are voluntarily exposed to advertising. However a great deal of advertising is imposed upon the consumer, without any compensating benefit being offered.

In addition to simple annoyance, advertising spreads inaccurate and incomplete information which distort consumers purchasing decisions, causing a loss to consumers and diverts valuable investment away from improvements in productivity and quality of goods. Advertising is not entirely bad, but it does not have to be to justify special taxation. The presence of a significant (uncompensated) harm from advertising is enough to justify the tax. Particularly since the revenues from the tax could be used to fund increased spending or to cut other taxes, such as those on labour and investment.

The government needs to generate revenue one way or another to pay for essential services e.g. national defense, the criminal justice system, healthcare. Raising this revenue by taxing bad things (ie. externalities: pollution, advertising etc.) is likely to lead to increased efficiency. So even those of us who think taxes should in general be lower, can still legitimately support this tax, provided cuts in other taxes accompany its enactment.
Read the rest of the article for the explanation.

Though I don't have the relevant knowledge to properly judge the argument, it makes a lot of sense to me and I can't see any flaws in it. At the very least, it's a type of solution that most people seem largely unaware of, and it would be instructive to see why it might or might not be usefully applied to this situation.

In my opinion, the article responses aren't worth reading, because they're, well, sadly pretty juvenile. Of course, I'm just calling it as I see it, and you may disagree with me.

I have an additional negative effect of advertising that I'll breifly add. It's that it helps cultivate a norm whereby things can and are to be evaluated based on their apperances and based on the things they are associated with, rather than on matter of actual substance.

The idea is, we learn our norms from our environment, and advertising makes up a significant part of that envrionment. This kind of evaluation is, thanks to advertising, such a perfasive part of our lives, and I think this rubs off onto our habits and standards for evaluating everything else.

I know people will disagree with this on the grounds that we can easily distinguish between advertising and other arenas of public opinion etc where evaluation of ideas etc come into play. At the moment I'm not sure what is the best way to argue against this view, though it should be obvious that I don't think it is correct.

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