AAF Alert: September 25, 2013

Ad Deductibility Still Threatened

Senior staff members of the House Ways and Means Committee have confirmed that limiting the full federal tax deduction for advertising expenses continues to be under consideration. They have said there is a strong possibility that the ad tax could be in the initial version of the tax reform legislation that Committee Chairman Dave Camp, R-Mich., hopes to release later this fall.

It is still very important that you and other members of your ad club and company contact the offices of Committee members as soon as possible, and express your strong opposition to such a proposal. This is especially important if you live in a Committee member’s district.

Any tax on advertising would cost the nation millions of jobs and hundreds of millions of dollars in lost economic activity. This is a direct impact documented by a landmark study of the economic impact of advertising on the U.S. economy.

Advertising – local, regional and national – generates $5.6 trillion in total economic activity for our country and helps support 22.1 million jobs in the U.S. economy. The stimulus generated by advertising brings jobs and sales to every state and to every congressional district. Even a modest reduction that limits the amount a business may deduct of its total advertising spending could cost the nation 1.6 million jobs and $419 billion in economic sales activity.

There is simply no economic or practical justification for enacting a limit on the deduction of advertising costs. The Tax Code has rightly permitted this deduction for the 100-year life of the corporate income tax. It is not a special preference or deduction, it is a normal and necessary expense that a business must pay to communicate with customers and generate sales.

The chances that tax reform will be enacted this year or next remain remote. However, any bill introduced or considered in Ways and Means may well become the baseline for future years. As such, it is critical that we do all we can to ensure that an ad tax is not included.

The members of the Committee can be found on the Ways and Means Committee website. Most have configured their contact section to only accept emails from constituents. However, they can still be reached through their Chiefs of Staff. Contact information is listed below.

Please report back any response you may receive and do not hesitate to let me know if you have any comments or questions. Thank you for your assistance with this most important matter.

Click here for contact information for the Chiefs of Staffs of Ways and Means Committee members.