Advertising exists for a simple reason. It works. Corporations do not spend billions each year on advertising for no reason, and if advertising was useless, it could safely be abandoned. As for television advertising, some of it can actually be amusing, which is why there are in fact many people who watch the Superbowl for the commercials. Also, we have TiVo now which allows one to escape advertising. Also, have people overlooked the fact that ads provide a fine time to prepare food or drink, use the restroom, or perhaps even carry on a conversation?
Look at premium movie stations which have no advertising. They can afford to do this because they charge their viewers a fee to watch television. I don't think that consumers should have to pay a fee to watch the news. Television networks need a certain volume of advertising in order to earn a profit. Taxing advertising will simply make it harder for them to provide the entertainment that they provide now. As for whether the benefits of television for example outweigh the annoyance cost of advertising, the answer is quite simple. Yes. If the consumer received more grief from ads than pleasure from the television show, the consumer would either not watch the show, or perhaps use one of the many simply methods I suggested for advertising to be avoided.
"Billboards, telephone advertising and spam are a few of the commonest forms of unsolicited advertising we are exposed to. Here the case for taxation is open and shut, the consumer faces the costs of annoyance and loss of time from the advertising, and receives no compensation for it, a classic case of externality. I don't think anyone would complain if these forms of advertising were greatly reduced."
You're ignoring one thing here. First, these billboards would not be in place if they did not help generate revenues and profits for companies. There is a party that benefits here, even if you want to take the rather extreme stand that there is no consumer benefit. Since billboards cost money, either for leasing the space or building the billboard itself, someone is profiting from it. As for phone calls, I believe we now have something called Caller ID. This does help, and telemarketers are easy enough to hang up on. The one thing that brings me closest to agreement with you here is spam, but even then, it's easy enough to delete. Again, it works. Believe it or not, a small fraction of people who receive spam go out and buy whatever is being advertised.
As for your points on misinformation, I don't see the problem. All advertising involves bending the truth. If you're trying to sell a house, you don't tell the potential buyer about a potential rat problem that might exist in the basement. It is the consumer's responsibility to gather needed information and to make an informed choice. You cannot expect perfect information to come from producers of goods and services. This is plainly counterintuitive and rediculous. The firm producing a good is responsible for maximizing profits.
Let the consumer gather information and make a choice. Consumers aren't the helpless victims that some would want to make them out to be. They have brains, and can make independent decisions. It just takes a little bit of effort, and more than many are willing to give. If you're too lazy to take a little time to learn more about what you are buying, than you deserve an inferior product. After all, it's not fair that a consumer who takes the time and effort to learn about the products of different firms should not see some benefit for his effort, over the typical apathetic consumer.
Also, there is another serious flaw in your logic. You say that advertising makes one unsatisfied with their current state. I see where you draw this conclusion. You, however, mistake this as a bad thing. Think about it. Why do we invent new products and technologies? Because there is some need that is not being filled, or we are not satisfied with what we have. It is that desire to find something better that results in the great advances that we have made. Without that desire, you wouldn't have posted this article in kuro5hin. There would be no kuro5hin, since there would be no internet, no computers, and so forth. I understand your point regarding competing underarm deoderants; however, if you get rid of that lack of satisfaction with the status quo, you also get stagnation and ultimately decline. Especially when no goods are first being produced, there is a great need for advertising. If you tax advertising, you at best make it more expensive, which will of course favor large corporations which have the money to spend, and harm smaller firms and startups which have less to spend.
Finally there are social reasons which also would lead us to reduce the amount of advertising we are subjected to. Advertising is more than just a device for promoting products it is also a device for promoting ideas and values. The danger of this is that the amount of advertising a group or individual can afford, thus determines their ability to promote their views, and perhaps eventually the weight that those views and values are eventually given. Thus advertising tends to push society in the direction which its richest members desire, regardless of whether this is good for the majority of the people. Although unrestricted political advertising is considered in some countries (particularly the USA) to be a freedom of speech issue, it is also an equity issue. In a democracy the loudness of our voice should not be determined by the depth of our pockets. Singling out advertising for higher taxes would reduce amount of influence which a dollar can purchase, and as such is desirable."
Again, if you tax advertising, everyone pays the tax. If anything, the wealthy are more able to afford to pay taxes, and so might even acquire a greater stake in advertisement time. Even your graduated tax structure, which unfairly bills larger firms at an increased rate, still has problems. First, your tax applies equally to firms which are promoting less than quality products and firms which truly are producing the best products for the best prices. You also overlook the most obvious point about advertising, which is that it works. If there is less advertising, demand for goods will decrease.
Your plan will put a large number of advertising firms out of business, cause unemployment among those who are laid off, and damage the ability of businesses and organizations to reach their target audiences. You inhibit communication, even though you would argue that communication in advertising is full of misinformation. Also, some advertising has genuine informative value. Either you tax this fully, forcing not for profits to pay large taxes, or you create an exemption, and are are being inconsistent.
Finally, I haven't even reached the point where I comment about this being a tax on speach, which if is a right that cannot be infringed upon, also is a right that cannot be taxed, since anyone can see that taxing something creates a burden on the activity. On constitutional grounds, this plan is deeply flawed, and fortunately will never be accepted by any self-respecting court. After all, what right do you have to make a value judgment about what should and should not be protected speech? Your ability to prove how harmful advertising is, is limited at best. This is why taxing or trying to restrict any speech is dangerous. It opens up a precedent to make other restrictions. Those who might like to see some form of speech be reduced or eliminated must carefully consider how they would feel if something valuable to them suffered the same fate. I can hear some people screaming, "But advertising is different from the free speech I exercise." Perhaps, but that involves making a value judgment, which could just as easily go the other way.
It is all too easy to pick out something that we find annoying in the world, and decide that it should be either eliminated, or taxed in order to reduce its presense. What is much harder to do is to consider the effects of its removal or reduction. You seem to assume incorrectly that everything will remain the same, except that we will have less annoying advertisements to deal with. This, however, is simply not accurate, and any one of the considerations that I have brought up should show that at best, a tax on advertising would be problematic, and at worst, it would create a severe burden on society and our future. The potential cost clearly is larger than the potential benefit of reducing advertising. Doing so simply will not provide the solutions that you seem to expect.