In an effort to provide our membership, and our advertising community with timely Governmental legislation, which directly or indirectly affects our industry, AAF-Houston is proud to pass along this AAF Government Report by Clark Rector Jr., Executive Vice President – Government Affairs.
Advertising expenses will now be taxed.
Senator Max Baucus, D-Mont., Chairman of the Senate Finance Committee and Dave Camp, Chairman of the House Ways and Means Committee have each released draft tax reform legislation
Contact your Senators and Congressmen today.
This is legislation that has been placed on the fast track. Timing is critical and your attention is needed now. It is extremely important that the advertising industry and its clients speak loudly and clearly to Senators and Congressmen and oppose any limitation on the full tax deductibility of advertising. Please contact John Cornyn and Ted Cruz today and ask them to oppose any change to the tax treatment of advertising.
517 Hart Senate Office Building Washington DC 20510
185 Dirksen Senate Office Building Washington DC 20510
To contact your representative simply:
2) Enter your Zip Code in the “Find Your Representative” search box.
3) Click on your representative.
4) Click on his or her “Contact” button.
Important Points to Make
The stimulus generated by advertising brings jobs and sales to every state and to every community in the country.
- Advertising – local, regional and national – generates $5.6 trillion in total economic activity for our country and helps support 22.1 million, or 15% of all jobs in the U.S. economy. Even a modest reduction that limits the amount a business may deduct of its total advertising spending could have a devastating impact on jobs and economic activity.
- Advertising directly impacts the sales of a business. More advertising – more manufacturing, more services, more sales. Less advertising, less sales. For 100 years the Tax Code years has rightly permitted businesses to deduct the full cost of their advertising, just as it permits the deduction of other business costs like salaries, rent, utilities and office supplies. 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.
- Nobel prize-winning economists who have looked at the advertising deduction have concluded that nothing in the economic literature justifies a change in tax policy. They have argued it makes no economic or common sense to make businesses pay more for advertising.
- Making advertising more expensive would only cause a decline in ad spending and cost jobs, since every $1 spent on advertising leads to $20 in economic activity.
- The proposal also does not consider that companies buy new advertising each year and would feel the brunt of this tax annually. Not only would they have less money to spend on advertising year after year, but media companies would also be impacted as advertisers would be forced to reduce their ad buys.
This battle is not the ad industry’s alone to fight.
Removing the tax deduction from advertising as a business expense will directly affect your clients’ ability to successfully promote and sell their products and service. As a steward of your clients’ advertising dollars, you are responsible in alerting them to this issue. Encourage your clients to join in this fight. Many of them are political donors and have strong voices with their senators and representatives.
For more information contact Clark Rector Jr., Executive Vice President – Government Affairs, American Advertising Federation.