Commentary

California Ballot Initiative Proposes 1,000% Tax On Political Advertising

by Philip Rosenstein , Staff Writer, June 6, 2016

The California ballot, both the primary in June and the general election in November, offers residents the opportunity to vote for a radical change in public policy.

During a cycle where the amount spent on political advertising is increasing drastically, a captivating statewide initiative has the chance to make it onto the November ballot.

The “California Political Advertisement Sales Tax Initiative” (15-0106) would impose a 1,000% tax on political advertising in the state, with returns used exclusively for funding education.

Political groups and candidates would have the first million dollars exempted, ensuring that smaller campaigns remain viable in local markets.

Passage of such a measure would likely have drastic effects on the political advertising market in California. It would disincentivize certain ads -- possibly limit negative ones -- and highlight the importance of awareness around candidates and causes.

This move could have a deep effect on our national democracy, as negative and attack ads often have suppressive repercussions on voter turnout.

The proposal does sound extreme, and the text itself predicts a revision of the 1,000% number. “If a Federal District Court or Supreme Court of the United States find this tax to be too high, this law shall immediately ratchet down to the highest acceptable level and remain in place.”

Super PACs and outside groups do pay a hefty markup in many markets, when compared to candidate campaigns. The return, however, doesn’t translate into public revenue. The incentivization structure around political advertising would see a serious shift.

The initiative still needs to reach the threshold of 585,407 valid signatures to be included on the ballot in November, no short order. A similar proposal, that didn’t include the $1,000,000 exemption, failed to reach the necessary total signatures in the allotted time.

At a time when the political advertising landscape is quickly adjusting to new technologies, ballot initiatives like 15-0106 are pushing the boundaries around the regulation of political advertising.

advertising, politics

3 comments about "California Ballot Initiative Proposes 1,000% Tax On Political Advertising".

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Anglyn Hays from Free Lance Writer Hire Me!, June 6, 2016 at 2:22 p.m.
Nice job. Expect lots of other innovative ideas around our problems of monied politics. Bought and paid for politicans is nothing new and the Supreme Court decision Citizens United merely made plain what had been quietly done in other ways since WWII. I hope California tries this.
Reply

Linda Moskal from WNPV Radio, June 6, 2016 at 4:23 p.m.

Who will have to pay this tax? The candidate or group buying the advertising? Or the medium selling it? In the case of broadcast media, this would be an awful burden since the government requires us to sell federal candidates anything they want at the lowest advertising rate! We'd have to accept the buy. Could we pass along the tax?

Philip Rosenstein from Law360 replied, June 7, 2016 at 1:35 p.m.

These are good questions, Linda - it appears as though the tax would fall on the advertisers, lowering the incentive to bombard the airwaves. But your point still holds, it seems as though the initiative could hurt the sellers as well, with demand being affected. I do think it is fair to assume that the 1,000% number would be seriously reexamined.