The United States is in the midst of an obesity epidemic. This public health crisis demands urgent attention and action, including removing the little-known tax subsidy for junk food advertising to children.
Under the Federal Income Tax Code, advertising costs may be deducted as ordinary business expenses. Assuming a corporate tax rate of 12.6%, the US Government provided food and beverage companies a subsidy of over $103 million in respect of the $817.5 million worth of traditional and new media advertising to children and adolescents purchased in 2009. In theory, the elimination of the subsidy would reduce the incentive for food and beverage companies to advertise junk food to children, resulting in less exposure to such advertisements among children. In turn, this would result in children eating less junk food, leading to health benefits and reduced healthcare costs.
Law-makers have tried to eliminate the tax subsidy before. Various bills have been proposed, including by Senators Blumenthal and Harkin and Representative DeLauro. Although none of these bills have passed, there is mounting evidence of the positive impact that eliminating the subsidy would have on children’s health outcomes and healthcare costs, including a 2015 study by Sonnerville et al., which modelled “the effect of a national intervention that eliminates the tax subsidy of advertising nutritionally poor foods and beverages on TV to children aged 2-19 years.” The study found that the intervention would result in a small reduction in obesity prevalence resulting in increases in quality-adjusted life years (QALYs) and substantial reductions in healthcare expenditures. The authors also concluded that “the intervention was “cost saving,” as it would result in an increase in QALYs and reduction in total costs compared with current practice.”
A comprehensive approach to reducing marketing of junk food to children
Eliminating tax subsidies is one of many possible approaches to reducing rates of child and adolescent overweight and obesity. Indeed, the World Health Organization, the American Academy of Pediatrics, and many other important authorities recommend banning junk food advertising to children. Although the US Government has not moved to adopt a ban, many scholars argue for this approach, adding that the correct interpretation of the First Amendment allows for regulations to protect children from junk food advertising.
In the meantime, eliminating tax subsidies for such advertising is a step in the right direction. Eliminating the subsidy may also play a role in increasing public awareness of children’s unique vulnerability to advertising and generate public support for a comprehensive ban.
The views reflected in this expert column are those of the individual authors and do not necessarily represent those of the O’Neill Institute for National and Global Health Law or Georgetown University. This blog is solely informational in nature, and not intended as a substitute for competent legal advice from a licensed and retained attorney in your state or country.