The Power to Destroy: Newspaper Advertising Is a Tempting Target for Strapped States, but Beware the Economic and Social Consequences

Article excerpt

JUST LAST YEAR, A FEW STATES were looking for ways to help their seemingly endangered daily newspapers, even though the industry has staunchly rejected government bailouts. Washington, for instance, cut the business tax on newspapers by 40%, the same break given the state's struggling aviation and timber industries.

But these days, states are more likely to be looking at newspapers as new sources of tax revenue. Governors are scrambling to fill huge budget deficits caused by falling tax receipts, unfunded pensions and a federal government that just proposed to cut funding to states by $190 billion.

These states aren't just proposing to extend the sales tax to copies of newspapers and magazines--a government levy on information and the discourse of democracy that is odious enough. Instead, they've found a juicier target: newspaper ad revenue. Governors in Pennsylvania, Michigan, Okalahoma, and no doubt other states in coming weeks want to extend the sales tax to advertising in newspapers and, in some cases, other advertising media.

Now, let's stipulate up front that nearly all newspapers are for-profit businesses subject to the usual array of local, state and federal taxes--and rightfully so. Neither, we'd agree, is there anything particularly nefarious about the proposals on the table to extend sales taxes to newspaper ad revenue. In all eases, newspapers are simply being roped in to a long list of previously untaxed goods and services. In Pennsylvania, for instance, Gov. …