Tobacco Advertising: The Constitutionality of Limiting its Tax Deductibility

Publication Date: March 1998

Publisher: Library of Congress. Congressional Research Service

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Under the Internal Revenue Code, advertising is ordinarily deductible as a business expense. 26 U.S.C. section 162. It has been proposed, however, that the deductibility of the cost of advertising tobacco products be limited or eliminated. Since advertising is a form of speech, this raises the question of whether such a limitation would violate the provision of the First Amendment that "Congress shall make no law . . . abridging the freedom of speech, or of the press . . . ." We conclude that it apparently would not. As advertising is commercial speech, it is not entitled to the same level of First Amendment protection as other speech, and to make it more expensive by limiting its tax deductibility would apparently not violate the Central Hudson test that the Supreme Court applies in determining whether governmental restrictions on commercial speech are constitutional.