AAF Governtment Alert: Possible Tax On Advdertising

We have recently learned from a Member of the House Ways and Means Committee that the Committee is seriously considering a tax on advertising as part of the tax reform bill that Chairman Dave Camp, D-Mich, hopes to release later this month or early October. It is critical that you and other members of your ad club and company contact members of the Committee as soon as possible, and express your strong opposition to such a proposal.  This is especially important if you live in a Committee member’s district.


We do not know the exact form that the tax may take.  Ideas that have been discussed in the past include a proposal that would allow businesses to deduct only 80 percent or less of their advertising costs.  Other proposals would require businesses to amortize a portion of advertising costs – postponing the deduction over several years until long after the advertising has appeared.


Any kind 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.


As I wrote in an earlier alert, 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 just like 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.


As you may have heard in news reports, tax reform is considered a long-shot for enactment this year.  However, even if does not pass, any bill drafted by the Ways and Means Committee is likely to be the starting point for future reform efforts.  Therefore, it is essential that we persuade Committee members and Chairman Camp from including a tax on advertising in the draft bill. 


The members of the Committee are listed below.  They all can be reached through links on the Ways and Means Committee or U.S. House of Representatives websites.  Please report back any response you may receive and do not hesitate to let me know if you have any comments or questions.

Committee on Ways and Means


Camp, Dave (MI), Chairman
Johnson, Sam (TX)
Brady, Kevin (TX)
Ryan, Paul (WI)
Nunes, Devin (CA)
Tiberi, Pat (OH)
Reichert, Dave (WA)
Boustany, Charles (LA)
Roskam, Peter (IL)
Gerlach, Jim (PA)
Price, Tom (GA)
Buchanan, Vern(FL)
Smith, Adrian (NE)
Schock, Aaron (IL)
Jenkins, Lynn (KS)
Paulsen, Erik (MN)
Marchant, Kenny (TX)
Black, Diane (TN)
Reed, Tom (NY)
Young, Todd (IN)
Kelly, Mike (PA)
Griffin, Tim (AR)
Jim Renacci (PH)


Levin, Sander (MI), Ranking Minority Member
Rangel, Charles(NY)
McDermott, Jim (WA)
Lewis, John (GA)
Neal, Richard (MA)
Becerra, Xavier(CA)
Doggett, Lloyd (TX)
Thompson, Mike (CA)
Larson, John (CT)
Blumenauer, Earl (OR)
Kind, Ron (WI)
Pascrell, Bill (NJ)
Crowley, Joseph (NY)
Schwartz, Allyson (PA)
Davis, Danny (IL)
Sanchez, Linda (CA)

Clark Rector
Executive Vice President-Government Affairs
American Advertising Federation