And You Helped Pay for Them Through Advertising-Deduction Loophole

Notorious corporate tax dodgers were among the big spenders on Super Bowl ads this year–and you helped pay for their commercials because of a loophole in the tax code. T-Mobile, General Motors and Netflix were among the six corporate advertisers that over a recent period paid less than 10% in federal income taxes–but were able to pay around $8 million per 30-second spot airing during the big game, according to a new analysis by Americans for Tax Fairness (ATF). The advertising deduction allows corporations to shift part of the expense for commercials onto the American taxpayer. 

“However entertaining Super Bowl ads can be, there’s nothing funny about consumers subsidizing them–especially not for corporations that fail to pay their fair share of taxes,” said David Kass, ATF’s executive director. “Giant corporations that can’t seem to find the cash to pay their taxes apparently have plenty to spend on commercials. We need to raise the corporate tax rate and close loopholes like the advertising deduction. That’s how we pull out a win for the American people.”

Americans for Tax Fairness Analysis

The statutory tax rate is 21%; these and other corporate tax dodgers knock their effective rate down to single digits (or less) by exploiting special breaks in the tax code. Netflix and Nike, for instance, each avoided roughly a billion dollars in taxes over the period 2018-22 through the stock options loophole.  

The advertising deduction allows companies to write off the full cost of commercials in the year spent, even though in the case of Super Bowl ads in particular it would be fairer if they had to write the cost off over several years–what’s known as amortization. That’s because while some advertising seeks immediate results–ads for a one-day sale, for instance–much of it is to build long-term brand awareness and loyalty. That second reason for running commercials is best exemplified by prestigious Super Bowl ads.