Robert Richardson

As a lifelong Nebraskan who grew up on a ranch, I know firsthand the frustration that comes with the excessive cost of property taxes in our state. For far too long our elected leaders have talked about this problem but done nothing to address it.

Gov. Jim Pillen should be commended for recognizing that property taxes are out of control. However, his solution to this problem is the wrong one. Cutting property taxes by shifting the cost to other people and other taxes, including advertising taxes, is not the answer and will lead to a number of unintended consequences.

I am also owner of A&K Marketing Inc., an advertising agency located in Omaha, and I am strongly opposing Legislative Bill 1354, the Advertising Services Tax Act. If passed, this legislation would have detrimental effects not only on advertisers, but also on Nebraska’s small-business community and our state’s economy.

Throughout my years of experience, I have witnessed the positive impacts of advertising firsthand. Advances in advertising, particularly digital advertising, have allowed “mom and pop” stores in Nebraska to expand their consumer base and compete with large corporations for customers at a nominal price.

Lives have been changed, businesses have flourished, and more Nebraskans have gained employment because of digital advertising. Taxes on digital advertising would hurt businesses and endanger Nebraska’s economic momentum.

Advertising is an engine that fuels our economy — nearly 19% of our state’s total economic output can be attributed to advertising. The advertising industry should be promoted and supported, not attacked. Taxes on our industry mean less advertising, which leads to fewer sales and ultimately less revenue collected by the state.

In addition, the impact of this legislation would be felt most by our Main Street businesses and hardworking families. Consumer prices will rise, as local businesses will be forced to raise prices to offset their new tax burden. Higher advertising costs will lead businesses to pass these expenses onto consumers, ultimately affecting the cost of living for Nebraskans.

This legislation would also lead to smaller marketing budgets by main street businesses that promote their products or services and to establish goodwill for their business and reduces the advertising industries contribution to Nebraska’s economic output. Every dollar spent on advertising has a multiplier effect on the Nebraska economy, fueling sales, supplier purchasing, and increasing power for consumers.

This new tax would also send a message to the rest of the nation that Nebraska is unfriendly to business. We cannot allow our state to have this reputation, especially after the strides we have made in recent years. This proposed tax would erode this progress and affect our state’s ability to attract new investment and retain businesses.

There are also a host of legal issues surrounding this proposal that are also worrisome.

A few years ago, Maryland became the first state in the country to implement a digital advertising tax. Ever since then, the state has been in court defending the tax for being in violation of a number of laws — take your pick: the First Amendment, the Commerce Clause, the Internet Tax Freedom Act.

It is likely that the Maryland law will be ruled unconstitutional. The proposal in question in Nebraska,  LB 1354, closely resembles this law. If passed, it is inevitable that LB 1354 will face legal challenges, which means  hardworking Nebraskans will be forced to foot the bill to defend it in court.

Rather than imposing taxes on advertising services, we believe there are alternative solutions that can meet the state’s revenue goals without undermining our state’s economy. With a Republican governor and a Republican-dominated Unicameral, I know we can do better than this.