Media Groups Lobby for Tax Breaks

Of all the wasteful impulses many politicians have, one of the worst is giving big tax breaks to dying industries.

And yet they just can’t seem to resist.

Of all the people you’d expect to criticize special interests for trying to wheedle favors out of the politicians, you’d think journalists in the so-called Fourth Estate would be screaming the loudest.

And yet, they’re the ones doing some of the most shameless wheedling.

Thankfully, they haven’t been successful. Yet.

Case in point: The Wisconsin Broadcasters Association and the Wisconsin Newspaper Association spent at least 173 hours since last summer trying to convince Wisconsin politicians to create a tax credit that would give a big break to businesses that agree to continue to advertise in “local media” – something most businesses are increasingly loath to do because there are better alternatives.

I’m pretty sure most of you will never see this explained in detail in your local paper or on TV, so here’s the way the media wants it to work: Businesses can already deduct advertising expenses. There’s nothing wrong with that. That’s a normal cost of doing business. But two bills, AB 762 and SB 834, introduced in the just-ended state legislative session, would have gone a lot further and given many businesses income and franchise tax credits equal to 50% of the amount paid to advertise in a “local media outlet” up to a cap of $5,000.

The cumulative tax breaks would be enormous. According to a Wisconsin Department of Revenue analysis of the bill sponsored by Sen. Roger Roth (R-Appleton) and Rep. Todd Novak (R-Dodgeville), the tax credits would amount to at least $65.7 million annually.

The credits could be claimed for five years so the break would actually be at least $328.5 million and, according to DOR, probably significantly more.

This is a classic case of government choosing favorites – and the media trying to be one.

Fortunately, saner heads prevailed and both bills died as the legislative session ended.

Unfortunately, similar legislation supported by two Wisconsin Democrats, Sen. Tammy Baldwin and U.S. Rep. Mark Pocan, has been introduced on the federal level. One component of the federal Local Journalism Sustainability Act is very similar to the Wisconsin bills. Other parts of the federal bill would create credits of up to $250 annually for local newspaper subscribers and, believe it or not, give credits of up to $25,000 per year to publications hiring new staff.

That’s pretty close to a direct government subsidy of reporters.

Would be a lot cleaner, I think, if the government just put money directly into the reporters’ bank accounts. They could check their balances online during breaks in the hearings at the Capitol or statehouse or local city hall that they are paid to cover.

Papers are dying. One of the supporters of the handouts in Wisconsin pointed out that “the internet has devastated the business models of local newspapers.”

No kidding.

“Since 2000,” stated Steven Waldman, chair of the Rebuild Local News Coalition and co-founder of Report for America, “there has been an 81% drop in newspaper advertising revenue. Some 1,800 communities have no newspapers and thousands more have ‘ghost newspapers’ which barely cover local issues.”

Nationally, he says, there has been a 54% drop in the number of reporters since 2000.

Sounds about right. I was once one of the reporters and columnists who left the newspaper business because it is dying and, with some exceptions mostly at the national level, not sustainable or worth investing in.

We badly need a new way in this country to hold government accountable, call out adherents of crony capitalism, fight preferential tax treatment and spotlight bad policy.

News organizations need to find a way to transform themselves and use a new model to continue to point that out.

Not engage in it.

Mike Nichols is the president of the Badger Institute. 

Government can’t prevent death was originally published by the Badger Institute.