Legislation Would Use Tax Code to Stop Junk Food Ads Targeting Kids

Would close loophole for marketing unhealthy grub to children

The debate in Washington over which foods should or should not be marketed to children is far from over. And with Congress getting serious about taking up tax reform, there is a new opportunity for lawmakers to use the tax code to regulate food advertising under the guise of raising more revenue for the government.

Citing "the epidemic of childhood obesity," Rep. Rosa DeLauro (D-Conn.) introduced a bill backed by four other Dems that would take away the ability of food companies to claim a tax deduction for marketing "unhealthy food products to children."

"Taxpayers should not continue to subsidize a tax loophole that allows companies to deduct expenses for marketing unhealthy foods to kids," said DeLauro.

The bill presents a new threat to food advertisers after companies managed to shut down the government's push to adopt sweeping voluntary marketing guidelines two years ago. It would rely on definitions of "food of poor nutritional quality" as determined by Health and Human Services and the Federal Trade Commission, two of the same agencies that were part of the federal group looking to prohibit advertising to kids 88 of the 100 most consumed foods, like whole wheat bread and most yogurts.

"The tricky thing is that [federal] dietary guidelines exist, but they aren't food specific. They set out general guidelines for consumption of sugar or salt, for example, so the agencies would have to figure out if a particular food product meets the guidelines," said Dan Jaffe, evp for the Association of National Advertisers.

Advertisers responsible for 80 percent of the food ads targeting children follow their own self-regulatory nutrition guidelines for marketing food to children, and by the end of the year, will comply with stricter guidelines. Between 2006 and 2009, advertisers have cut food ad spending targeting children by nearly 20 percent, per a FTC report. But that hasn't been enough for some lawmakers, like DeLauro, who prefer a government-imposed solution and keep looking for new ways to curb food ads targeting kids. 

Though DeLauro is in the House minority, her bill could gain momentum among lawmakers desperate to raise revenue. Both Rep. Dave Camp (R-Mich.), chairman of the Ways and Means Committee; and Sen. Max Baucus (D-Mont.), chairman of the Senate finance committee, openly solicited lawmakers to submit proposals for what tax expenditures should be included in a reformed tax code.

The bill, or something like it, could also find support in the Democratic-controlled Senate side where Sen. Jay Rockefeller (D-W.Va.), chairman of the commerce committee, last month said he supported eliminating the tax deduction companies use "to market junk food to kids."

Advertisers need to be vigilant that more bills don't chip away at the ad tax deduction. "There is more focus on a tax rewrite than there has been for a long time. No one knows where this is going or whether tax reform is going to take off," Jaffe said. "This [bill] opens a Pandora’s box. The day you take away the deduction for one category, there will be a multitude of other things attacked as well."