Tuesday, November 27, 2012

Who Wouldn't Want A Tax Break?


While watching football on Thanksgiving Day, I was surprised by a commercial promoting small businesses in my beloved home of New York State.  The commercial even features a cameo from a regional western New York and personal favorite, Perry's Ice Cream.

Coming from New York State, I've been there to witness firsthand the gradual deportation of jobs and businesses, particularly from the northern and western parts of the Empire State.  So, I was delighted to see a national campaign promoting business growth in my home state.  However, as a marketer, I wonder if the message of incentives and tax breaks is the right one?

Most people think tax breaks are a great thing.  And in an ad directed at businesses for whom most of the other 49 states are also competing for their relocation, touting tax breaks will make New York more appealing, right?

Perhaps.  But I would argue not.  By saying that New York is offering business tax breaks is not to say that taxes are low in New York.  In fact, what they're actually communicating is the opposite message - that taxes are so high in New York that they have to incentivize businesses with special breaks.  Similar to a store running a sale, where the intention is to showcase the items, the message that's received is that no one wanted the stuff earlier.

Unfortunately, publicizing tax breaks to lure businesses to New York is mistakenly communicating the story that the overall economic climate of the state is difficult.  Instead of trying to obfuscate its tax reputation, the ad should promote why the state is actually good for business.

The entire point of the ad should be to explain what will make a business more successful in New York than anywhere else.  Obviously, simple tax breaks isn't it.    

An advertisement that answered this question would make a far more persuasive case for New York State.

One final thought, am I wrong to think that granting special tax breaks for some will only raise taxes on others?

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