Impact on economy may bring tax breaks

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The economic study released last week that showed the advertising industry's dramatic $151 billion impact on the New York metropolitan area is part of larger national economic impact report due later this year.

Both the local and national findings, conducted for the Advertising Tax Coalition, are sure to be used against efforts to end or limit tax deductions for a range of professional services that include advertising. In recent years, statewide initiatives have been mounted in Texas, Connecticut and Florida.

"Looking at these numbers, you should come to the conclusion to not do anything that will slow the economic engine or burden the effort to sell," said Dan Jaffe, exec VP of the Association of National Advertisers, which is one of the trade organizations in the tax coalition. "There's no reason to treat us adversely. If anything, it's reason to pat advertising on the back in all economic times and especially when times are difficult."

The study, conducted by the economic and financial-research firm Global Insight and directed by Nobel Laureate economist Lawrence R. Klein, is the first attempt to quantify in a comprehensive way the effects of advertising on the economy.

The New York portion, released during the city's Advertising Week, takes a broad view of the business' effects. It accounts for direct spending on and jobs created by advertising, as well as spending by direct and third-tier suppliers.

According to the study, the advertising industry this year will bring $151 billion into the New York metropolitan area's economy and is responsible, directly or indirectly, for about 16% of the region's work force.

far-reaching effects

"The direct impact is impressive, but it goes way beyond that and has ramifications for the whole economy of New York," Mr. Jaffe said.

The industry accounts for almost 19% of the region's $800 billion economy and roughly 680,000 jobs, the report found. The projected impact includes spending on advertising by New York businesses, its impact on sales, and the impact on direct and indirect suppliers.

Compared to other industries, advertising fares well in terms of its effects on New York. The direct impact, at $80 billion, is twice that of travel and tourism, at $39 billion and about one-third of real estate. Fashion, by comparison, directly impacted $43 billion.

Mr. Jaffe said that the national study is likely to have similar findings. "What we're finding in New York plays out even in areas in which you wouldn't expect it, even in rural and remote areas," he said.

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