A Bipartisan Push In Congress Would Prevent An ‘Ad Tax’

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Worried about increased royalty payments for the music played on an AM or FM radio station?


There’s a new concern to turn your attention to, and broadcast TV’s C-Suite also may wish to pay attention.

Some 124 members of the U.S. House of Representatives have written to Speaker of the House Paul Ryan and Minority Leader Nancy Pelosi asking them to preserve the stimulative impact of advertising on the economy and “maintain the current tax treatment of advertising as a fully and immediately deductible business expense.”

Led by Kansas Republican Kevin Yoder and New York Democrat Eliot Engel, the Members of Congress assert, “The potential for strengthening our economy through tax reform would be jeopardized by any proposal that imposes an advertising tax on our nation’s manufacturing, retail and service industries.”

Making the argument that advertising has been accorded “the same treatment as all other regularly occurring business expenses, such as employee wages, rent, utilities and office supplies, throughout the 114-year life of the tax code,” the Members of Congress argue, “Any measure that would tax advertising – and therefore would make it more expensive – cannot be justified as a matter of tax or economic policy.”

The Members of Congress point to a study by the economic consulting firm IHS Economics and Country Risk. Their research finds that advertising supported 20 million U.S. jobs and $5.8 trillion in U.S. sales in 2014. The study also demonstrates that every dollar of ad spending generates $19 of economic activity, and that advertising contributes to 19% of the nation’s GDP.

Further, the Members believe that efforts to place a tax of advertising – by limiting the ability of a business to currently deduct advertising costs in the year they are spent – would run counter to a major goal of tax reform agreed upon by virtually all policymakers: to simplify the tax code.

For example, they say, “promoting a tax on advertising while pursuing full and immediate expensing of buildings and equipment furthers the irregularities and confusion present in our current tax system.”

A provision contained in a 2014 comprehensive tax reform bill introduced in the U.S. House of Representatives would have levied a $169 billion tax on advertising sold or purchased in the U.S.

Under that proposal, businesses would have been required to wait 10 years before they could fully deduct the cost of advertising purchased in the first year.

Gratitude came from NAB President/CEO and former Sen. Gordon Smith.

“The NAB thanks Rep. Yoder and Engel and the bipartisan group of 124 House members who have signaled strong opposition to a job-killing tax on advertising. Across America, advertising is an engine for economic growth that creates and supports millions of high-paying jobs. Advertising on local radio and TV stations and broadcast networks supports popular entertainment and provides listeners and viewers with trusted sources of news. In order to sustain our nation’s economic recovery and growth, It is imperative that tax laws continue to allow advertising expenses to be fully and immediately deductible.”

Dan Jaffe, SVP/Government Relations for the Association of National Advertisers (ANA), added, “Advertising’s immediate deductibility has been an important part of the tax code for more than 100 years, and it is even more relevant today given the fast pace of the marketplace. Advertising is a vital driver of our economy, and we urge Congress to not impose a burden on the selling process when they consider tax reform.”