AAF Government Report

October 25, 2013

Clark Rector Jr., Executive Vice President – Government Affairs

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Tax Reformers Continue to Consider Advertising Deductibility

House Ways and Means Committee Chairman Dave Camp, R-Mich., is continuing in his effort to draft major tax reform legislation.  According to sources from within the committee, limitations on the full tax deductible status of advertising remain on the table as the bill’s drafters try to find a way to lower the top individual and corporate rate to as low as 28 or 25 percent.  To achieve their goal of revenue neutrality, many tax deductions and preferences must be eliminated or reduced.

Drafts of the proposal – or any possible provisions affecting advertising – are unavailable.  Possible changes to the advertising deduction could be a partial disallowance, amortization of a certain percent of the deduction, or different treatments of “brand” vs. “product” advertising.  Some legislators have also suggested limiting the deduction for the advertising of disfavored products, such as tobacco or so-called unhealthy foods. 

Many reports suggested that Chairman Camp hoped to release the bill by the end of October.  While it now appears that deadline will not be met, the Chairman has said he would like to move the bill out of the Committee by the end of the year.  Chairman Camp is operating under a deadline.  Because of internal House term limits, he will only serve as the Committee Chairman until the end of 2014.

AAF’s nationwide network of grassroots members has responded strongly to our alert on the issue.  In addition to countless calls and emails, AAF clubs have organized online petitions and met personally with Ways and Means Committee members. 

While the odds are long that comprehensive tax reform will be enacted into law in the current Congress, it is still important to keep advertising out of the proposal as the legislation would set a precedent for future reform efforts. 

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