Depends. There are some who view the tax deduction for advertising to be a government subsidy.
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AM970 The Answer
- Thread starter bamagator62
- Start date
Depends. There are some who view the tax deduction for advertising to be a government subsidy.
From RadioInk:
"Only The Home Depot aired more commercials than the U.S. Department of Transportation last week, according to Media Monitors. The USDOT aired 40,287 spots on radio stations all across the country, with The Home Depot at 77,108."
LOL! What does the DOT advertise? Don't think I've heard them. And wouldn't those be classified as PSAs?
Nope. Paid ads. I'm sure you've seen them. "You drive, you text, you pay" All those drunk driving spots. "Click it or ticket." All paid spots. No PSAs. That's why they get ranked in Media Monitors next to Home Depot. Your tax dollars at work.
The theory is that prevention is cheaper than the combined costs of enforcement and the damages and social consequences of drunk driving and driving while texting. I wonder if there has been any valid research that demonstrates whether these ads are effective.
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They are mistaken. Advertising is a legitimate business expense.
But Big A's point is valid. There are some in government that believe that advertising should not be deductible as an expense. There are movements in various state legislatures to eliminate deductibles for advertising and there is talk of it on a national level.
It is not quite that way.
Every business expense is exactly that: an expense, not a "tax deduction".
In a business, expenses are deducted from gross revenues to determine the profit or loss of the enterprise. Tax liability or "taxable income" only results if there is a profit, but in all cases financial statements showing business income vs. business expenses are prepared. In other words, the profit after expenses is taxed and tax liability is only determined after it is established that there is a profit. You can not determine how much tax is owed on a business until you determine what, if anything, is left over after expenses.
(Obviously, it's more complicated than this... many capital expenses such as machinery, vehicles, etc., are not deductible in full as an expense in the same year they are incurred. And there are complicated things like oil depletion allowances that reduce tax liability which must be considered.)
Some legislators believe that advertising should not be allowed as a business expense. They are insane.
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Interesting, thanks. I always thought those were privately funded.
My point, David, and I was pretty clear on it, was that tax deductions can only be taken against tax owed. Corporate tax is only on income, so if there is no income, there is no tax to be paid, although loss carry forwards can offset income in later years. Some expenses might be able to offset some property taxes, but a commercial radio entity is far more likely to be a net contributor to tax coffers as opposed to a recipient of tax income.
You do not specify gross income or net income, generally referred to as "gross" and "net". Tax liability is calculated only on net income, after all allowable expenses.
So there is no "tax owed" on gross income. All expenses are consolidated, deducted from gross income and the result is net income. Only then is the amount of tax owed known.
The only instances where gross income is taxed is in things like business licensees where the fee is based on the volume of business. And, of course, those fees are part of a business' expenses.
But your point ignores the fact that non-commercial stations perform a lot of services in exchange for the tax dollars they get. It's not radio welfare. The Reagan folks made sure of that. All of the people who came into Congress four years ago hell bent on defunding discovered that they actually liked this system, which is why they continued appropriating the money. And my expectation is they will continue regardless of what the proposed budget says.
What service(s) does NPR provide that is/are not already provided by the private sector?
You can start with the fact that they provide programming that private sector stations have stopped doing because there's no profit in it. Classical, jazz, folk music. They do the kind of in-depth world news that would only otherwise be available from other government-funded organizations, like the BBC or the CBC.
But depending on the state, there are information networks that would be unprofitable for private stations to run. State taxes pay for them, but there are federal matching dollars that help.
There is also the station-owned satellite distribution network that's available for all independent radio producers.
This is an excerpt from the testimony by the CEO of CPB to Congress. The full testimony is available online, if you wish to read it in entirety. But here's the key part of the funding system:
"Stations use CPB funding for local operations and to produce and acquire programming, which allows them to raise additional operational funds from corporations, foundations, state and local governments and from individual contributions, which are the largest source of non-CPB funding for public media. On average, every federal dollar invested in CPB is leveraged by stations to raise six dollars locally. This successful public-private partnership is uniquely entrepreneurial and uniquely American. Though models vary, funding for other countries’ public broadcasting systems comes almost exclusively from their governments, from licensing fees or from dedicated taxes. At $1.39 per American, the cost of our country’s service is proportionally small compared to other developed nations."
So as I said, this is not radio welfare. Every federal dollar is matched by $6 locally. Every person who works in public broadcasting pays taxes on the money they make. Just because they work for a non-profit does not exempt them from paying taxes on the money they make as citizens.
"Stations use CPB funding for local operations and to produce and acquire programming, which allows them to raise additional operational funds from corporations, foundations, state and local governments and from individual contributions, which are the largest source of non-CPB funding for public media. On average, every federal dollar invested in CPB is leveraged by stations to raise six dollars locally. This successful public-private partnership is uniquely entrepreneurial and uniquely American. Though models vary, funding for other countries’ public broadcasting systems comes almost exclusively from their governments, from licensing fees or from dedicated taxes. At $1.39 per American, the cost of our country’s service is proportionally small compared to other developed nations."
So as I said, this is not radio welfare. Every federal dollar is matched by $6 locally. Every person who works in public broadcasting pays taxes on the money they make. Just because they work for a non-profit does not exempt them from paying taxes on the money they make as citizens.
Lee Linwood
Frequent Participant
Piscopo incessantly cracking up, which comes across generally as fake laughter, and clapping his hands and stomping his feet contributes to the show being unlistenable for long periods of time, esp. when nothing funny or even remotely witty is said. He even cracks up while interviewing guests, which is particularly distracting and annoying. Debbie Duhaime obviously received the memo to laugh like a hyena too.
Lee Linwood
Frequent Participant
The list of advertisers on Piscopo's show seems very small and unimpressive consisting of just a few mom and pop restaurants, a local car dealership, a chiropractor and a few direct-response advertisers. And his ad rates can't possibly be high given his low ratings, I don't see how the show can be profitable.
Lee Linwood
Frequent Participant
Joe said "hundreds of thousands" listen to his show. That, I find hard to believe.
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