The deductibility of advertising expense has been a cornerstone of America’s business regulation for decades upon decades, but it is now under attack in the US Congress, and the National Alliance of State Broadcasters Associations is fighting it.
We already know that the bill being worked on in the House under the leadership of Dave Camp (R-MI) contains toxic language that would affect advertising deductibility, and we are hearing that the version of the bill moving ahead in the Senate under Max Baucus (D-MT) will likely mirror Camp’s effort.
As in a previous letter to Camp, numerous congressional leaders and key committee members received a copy, and all 50 members of NASBA were represented.
Here is the full text of the letter that went to Baucus, chair of the Senate Finance Committee, and its Ranking Member Orrin Hatch (R-UT). Dear Chairman Baucus and Ranking Member Hatch:
As you undertake the enormous task of reforming this country’s tax laws, we understand you are examining changes to the deductibility of advertising. As advertising is the life blood for local radio and television stations, any change to deductibility would deal an enormous financial blow to this country’s local broadcasters. The undersigned 50 state broadcasters associations respectfully urge you to reject any measure that would alter or eliminate the current law that permits a business to deduct the full cost of advertising in the year it is incurred.
Advertising has long been recognized and protected as an essential part of daily business operations since the Tax Code was adopted. For 100 years, advertising has been treated as an ordinary and necessary expense of doing business, no different than the costs of employee salaries, rent and utilities.
Any modifications to the tax treatment of advertising will have a significant impact on local television and radio stations, our audiences, and those community businesses that rely on broadcast advertising to sell their goods and services. Broadcasters rely heavily on advertising revenue to produce and deliver vital news, emergency information and high-quality entertainment to their local communities free of charge. For most broadcasters, advertising is their primary source of revenue, and for some it is the only source of revenue. In fact, local radio stations currently receive 96 percent of their revenues from advertising and television stations receive 94 percent from advertising. Creating a disincentive to advertise has real consequences on the ability of stations to serve their communities with local programming.
Moreover, the stimulant effect of advertising locally on Main Street and more globally on the larger U.S. economy is undeniable. Nationwide, broadcast stations generate more than $986 billion in economic activity and support 1.38 million jobs in all sectors, including auto dealers, banks, retail stores, and real estate brokers, among many others.
This issue is important enough to our local communities that all 50 state broadcasters associations have signed this letter asking you to please preserve the full, same year, deductibility of all advertising costs under the federal tax code.
RBR-TVBR observation: This is a must-win. Not just for broadcasters, but for the US economy in general. This is truly an occasion where broadcasters are in the frontline in a battle against a truly misguided piece of legislation that will harm every last person who lives in this great nation.
Go get ‘em, NASBA, go get ‘em!