November 30, 2017
- Ad Deduction Not in Tax Reform Bills
- Tobacco Company Advertising Returning to the Air
Ad Deduction Not in Tax Reform Bills
The U.S. Congress keeps moving ahead on comprehensive tax reform. The House has passed their version of reform and the Senate
is currently debating their version with amendments being offered and
voted on. Neither bill includes any limitations on the full current year
deduction for advertising expenses as a normal and necessary business
expense. This is very good news for consumers and the advertising
industry. However, it is still possible that the advertising deduction
issue could be raised before tax reform is finished.
currently hold a 52-48 majority in the Senate and Democrats have been
united in opposition to tax reform. Normally, the minority party can
block legislation in the Senate using the filibuster, which would
require a 60 vote majority to overcome. This would give Democrats the
leverage to either stop the reform or shape it more to their liking.
However, under the budget rules used to bring the bill to the full
Senate, Republicans can pass the bill with a simple majority (needing no
Democratic support), but only if the reform does not increase the
budget deficit by more than $1.5 trillion over ten years.
Republican leadership will still be challenged to find a 50 vote majority to pass the bill (if a vote is tied 50-50, Vice President Mike Pence
would cast the tiebreaking vote). Some Republican Senators find
different provisions of the Senate bill objectionable and are asking for
changes. Eliminating or changing parts of the bill could move the cost
of reform over the $1.5 trillion threshold. If the Republican leadership
tries to placate these members by making changes they may need to find
new sources of revenue in order to keep the price tag under $1.5
trillion. It is under this scenario that advertising could be at risk as
a source of revenue.
will continue to monitor the issue closely and strenuously object to
any effort to limit the full current year deduction for advertising
expenses. We know we have strong supporters in both the Senate and
House. A bi-partisan letter
defending the advertising deduction was sent to the Republican and
Democratic leaders of the Senate and Finance Committee. The letter was
authored by Senators John Boozman, R-Ark. and Tammy Baldwin, D-Wisc. and signed by thirteen of their colleagues. The letter is similar to the Engel-Yoder letter sent last spring to House and Ways and Means Committee leaders signed by 124 members of the House of Representatives.
reported before, we know AAF’s grassroots efforts are working. Many
members of the House and the Ways and Means Committee cited the strong
response from the advertising industry in their home districts as part
of the reason advertising maintained its full deduction in the House
One threat to advertising did arise during the Senate Finance Committee tax reform mark-up. Senator Clair McCaskill,
D-Missouri, filed but never formally introduced an amendment that would
have disallowed the deduction for direct-to-consumer advertising of
prescription pharmaceuticals. The AAF supported Advertising Coalition
sent a letter to members of the Finance Committee opposing the amendment.
Tobacco Company Advertising Returning to the Air
advertising, paid for by cigarette manufacturers, has started airing in
television markets across the country. The ads are part of the
settlement of a 1999 Justice Department lawsuit against tobacco
companies that led to a federal order for the companies to issue
"corrective statements" to offset decades of product advertising.
Numerous legal appeals pushed back the ads for many years.
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The AAF protects and promotes advertising at all levels of government through grassroots activities. Our nation-wide network monitors advertising-related legislation on local, state and federal levels. We put our members face-to-face with influential lawmakers while encouraging self-regulation as a preemptor to government intervention, when appropriate of course. To learn more about our advocacy efforts, click here.