AAF Government Alert: Threat to Advertising Deductibility

In the coming months, Congress may be taking up the first major reform of the U.S. Tax Code in nearly 30 years. The American Advertising Federation has let us know that Congress may consider significantly reducing the deduction businesses take for the ordinary and necessary expense of advertising costs as a way to generate more revenues to help pay for tax reform. This would constitute a tax on advertising and increase the cost of advertising for all businesses, as well as the tax liability for major advertisers.

AAF of the Midlands and the advertising industry need your help to stop this proposal. It is very important that you write, email or call your two Senators and Representative and urge them to oppose any tax on advertising in the form of a limit on the deduction for advertising costs. Ask them to communicate their opposition to taxing advertising to their colleagues on the tax-writing committees. Here is a draft letter.

Advertising – local, regional and national – generates $5.6 trillion in total economic activity for our country and helps support 22.1 million jobs in the U.S. economy. The stimulus generated by advertising brings jobs and sales to every state and to every congressional district. Even a modest reduction that limits the amount a business may deduct of its total advertising spending could cost the nation 1.6 million jobs and $419 billion in economic sales activity.

The critical message to convey to Members of Congress is that the deduction for advertising costs is not a special preference or deduction. Every business in America is entitled to this deduction, which is classified as an ordinary and necessary business expense. Other ordinary and necessary costs that may be deducted include the salaries of employees, rent for office space, utilities and other costs that a business must pay to keep the doors open and to generate sales.

This deduction is for core business expenses and has been permitted since the adoption of the Tax Code in 1913. You should emphasize that you are not seeking a special treatment or exemption – you are asking Congress to maintain the business expense deduction allowed for advertising for the past 100 years.

You can find your member of Congress and a link to his website here. Senators can be found here.

Please feel free to contact the AAF of the Midlands government relations chairman, Reba Campbell, at 803-587-0246 or rebahcampbell@gmail.com, if you have any questions. Also, please copy Reba on any letters you send to our Congressional delegation.