Ad Tax Threat Growing in House Ways & Means Committee

We have learned that there is a strong likelihood that Ways and Means Committee Chairman Dave Camp (R-MI) will include some restriction on advertising deductibility in his initial draft of a tax reform bill.  

The restriction being discussed could take two forms: (1) allowing businesses to deduct only a percentage of their advertising costs or (2) requiring them to amortize those costs – postponing the deduction of the costs over several years until long after the advertising has appeared. Either change would impose multibillions of dollars in additional costs on the business community.

Chairman Camp is expected to release a draft of a tax reform bill soon and begin markup later this month. It would appear that the Ways and Means Committee is giving such serious consideration to this change because it would generate a substantial amount of tax revenues, not because their position is supported by economic theory. Indeed, either form of a tax on advertising would cost the nation millions of jobs and hundreds of millions of dollars in lost economic activity. This is a direct impact documented by a landmark study of the economic impact of advertising on the U.S. economy. This study utilized a widely accepted model of the U.S. economy developed by Larry Klein, a Nobel Laureate in economics.  

While it seems counterintuitive that Congress would impose a tax on advertising while the nation is still trying to emerge from the Great Recession, it could become a reality unless Members of Congress hear your voice loudly in opposition to this proposal.

It is critical that you contact your Member of Congress who serves on the Committee and express your strong opposition to such a proposal. If your Member of Congress is not on the Ways and Means Committee, ask them to contact their colleagues to call on them to oppose strongly this misguided proposal. We have prepared talking points you can use in your contacts.

It is essential that we persuade Committee members and Chairman Camp that the draft bill should make no changes in the current deductibility of all advertising costs. Once ad taxes are put on the table, even if a tax bill doesn’t pass, it’s hard to get off the menu.   

If you have any questions, please contact Dan Jaffe (djaffe@ana.net) in ANA’s Washington, D.C. office at 202.296.1883.