Trick-or-Treat: Punishing Companies That Advertise Candy and Bad Foods to Kids (S. 2342)

What is S. 2342?

(Updated July 13, 2017)

This bill would eliminate tax deductions for companies that market foods with low nutritional content to kids.

In general, the advertising and promotional costs that businesses have are considered tax-deductible because they are part of the cost of running operations. Businesses can only deduct these promotional/advertisement costs when they are clearly related to the company and it's efforts to maintain a brand image, reach customers, and offer the public information.

Basically, if a company advertises a brand of food that lacks nutritional quality (think Gushers, Kool-Aid, Fruity Pebbles etc.) to children under the age of 14, they can no longer write those expenses off on their taxes. Related expenses from promotional gifts, travel, goods and services, including entertainment, amusement, or recreation would also not be eligible as a deduction.

The Secretary of the Treasury would have to enter into a contract with the Institute of Medicine to develop ways for evaluating and identifying brands with foods of poor nutritional value.

Any additional money from the elimination of these tax deductions would be put toward a Fresh Fruit and Vegetable Program, to offer fresh fruit and vegetables in low income schools.

Argument in favor

Companies will continue to advertise unhealthy foods even if this bill passes, but at least the incoming revenue will go towards promoting a healthy diet for children.

Argument opposed

Rather than trying to hurt food and beverage companies financially, why not eliminate this deduction, and create a new deduction for sponsoring youth sports or PE programs?

Impact

Children under 14, their families, food companies, advertisers, broadcast and publishing companies, the Secretary of the Treasury.

Cost of S. 2342

A CBO cost estimate is unavailable.

Additional Info

In Depth:

With nearly 79 million Americans considered obese — just shy of 35% of the population — policymakers and researchers are searching for solutions to end the obesity health crisis.

The food and beverage industry has fought back against activists who suggest standardizing food and beverage labeling. Their weaponry includes extensive lobbying  — a tactic that has been successful in defeating attempts by 24 states and five cities to create soda taxes, and minimized a nutritional reform of the school lunch program.

If this bill were to pass, it would set a precedent of targeting a specific industries’ usage of the advertising tax deduction. However, with advocates in the food industry, and others who think it's not the company's fault if obese people buy unhealthy products — S.2342 could be a challenge to implement.

Media:

Sponsoring Sen. Richard Blumenthal (D-CT) Press Release

The Hill

The Fiscal Times

Advertising Age

(Photo Credit: Flickr user ninahale)