You would think the government would want to make it easy for any business to do business in the US. However, Congress seems to think some businesses are not as good as others. Some members of Congress are attempting to make some businesses pay for what they sell even if it is not illegal to sell. Congresswoman Rose DeLauro (D-Connecticut), is proposing that businesses who sell unhealthy food targeted at children should not be allowed to deduct the expenses associated with marketing those items to children. The costs associated with advertising products such as candy, most breakfast cereals and even the famous McDonald’s Happy Meals would no longer be deductible business expenses.
In 2015, McDonald’s spent over $832.5 million – yes that’s million on advertising. Of course, only a portion of that advertising budget is for Happy Meals. Even if marketing Happy Meals was a quarter of McDonald’s advertising budget, that would be $208 million dollars they wouldn’t be able to deduct for tax purposes if Congresswoman DeLauro had it her way.
We all can agree that some “businesses” such as child trafficking should not be allowed to make any money at all, but what about businesses that are legal? Does congress have the right to say who can and can’t be in business? Who gets to decide whether an ad is targeted toward children or not, and who decides what is unhealthy? The problem is, the definition of unhealthy seems to change every week. This week everyone should be eating nothing but salad (without dressing of course) but it was not long ago that red meat or hamburger was considered a healthy choice. So do you distinguish between the sale of a hamburger in a Happy Meal vs. the fries that come with it? What about the fact that parents can now choose to have yogurt (sugary sweet yogurt must be good for you because – it’s, um, uh, yogurt) or apple slices instead of fries, so is only a portion of the advertising going to be an acceptable expense?
I avoid watching regular TV just because of medical prescription commercials. You know the ones that tell you the common side effects of this beneficial chemical prescription are death, coma and more death. I guess the difference is those commercials are not normally targeted at children. But should Congress have the ability to tell us that we can or can’t run our business? The medical marijuana industry is gaining momentum across the country with state after state making it a legal and legitimate business. Yet it is still illegal to sell according to the federal government. Selling alcohol and cigarettes is an approved business, yet last year, New York City officials attempted to ban the sale of soda that wasn’t sugar-free. I happen to be allergic to most artificial sweeteners so that would make them very unhealthy for me.
So legally selling something such as cannabis, which could potentially cure epilepsy and cancer without killing you, doesn’t qualify for the normal business deductions while selling a man-made chemical compound whose potential side effects are premature death does – as long as you aren’t advertising those pills to children during the Saturday morning cartoons.
I guess the point is that Congress can manipulate our businesses and income, while at the same time increasing the tax revenue it receives with just one signature. Are you keeping up on your tax strategies to avoid the hit at tax time? Give us a call and we can help you put a strategy in place.