Arizona, Iowa and Florida each passed broad advertising taxes. Each state later repealed the tax because it hurt their local economy and was impossible to administer. Since 1987, when the Florida services tax was repealed, broad advertising taxes have been considered in more than 40 states and rejected in each case. As corporate citizens, the advertising industry contributes to Oklahoma’s tax base through business operations, employees and shareholders.

Advertising taxes slow economic growth. Studies by the Wharton Econometrics Forecasting Associates show that a tax on advertising reduces local employment and personal income by substantial amounts. When the cost of advertising goes up, there is less advertising, which leads to less consumer demand. This slows the economy in general, reducing its usefulness to the government as a source of revenue.

A tax on advertising would send a very strong anti-business signal to firms that are considering locating their operations in Oklahoma. Advertising dollars that are currently spent in Oklahoma would be shifted to media outlets outside the state.

An advertising tax would create a huge collection and administration burden for both businesses and state government. Advertising is a very complex field, involving millions of ads placed with television, radio, magazines, and newspapers. Oklahoma government and businesses would need an army of accountants and lawyers to administer the rules.

A study by the widely respected research firm IHS Economics and Country Risk found that advertising contributed $3.4 trillion to the U.S. GDP in 2014, comprising 19 percent of the nation’s total economic output. Sales of products and services that are driven by advertising help support 20 million jobs or 14 percent of all jobs in the country. It would be counterproductive to undermine this positive impact by a misguided tax on advertising. (See attached information.)

Many small companies engage in cooperative advertising, where national manufacturers and local retailers share advertising costs. For many businesses, from drug stores to supermarkets and franchise restaurants to automobile dealers, cooperative advertising is a cornerstone of their marketing efforts. An Oklahoma sales tax on advertising could seriously threaten these cooperative agreements. National firms, in an attempt to use their limited cooperative advertising budgets in the most effective manner, would likely shift these dollars away from Oklahoma to states that do not diminish their selling impact through advertising taxes.