Ad Deductibility Remains Under Threat

Members of the House Ways and Means Committee and the Senate Finance Committee are seriously considering taxing advertising in order to raise revenue to finance health care reform.  The current proposal would deny the business expense deduction for the cost of marketing prescription drug products to consumers.  While the immediate target is the pharmaceutical industry, this proposal raises very serious threats for the deductibility of marketing costs for all other products and services.

The two committees are working to develop a package of revenue raisers to offset the costs of health care reform and may vote on the package in the next few days, so time is of the essence.  ADVERTISING DEDUCTIBILITY MUST NOT BE PART OF THAT PACKAGE!   

It is critical that your company immediately contact the members of the House Ways and Means Committee and the Senate Finance Committee to express your opposition to any restriction on the deduction for marketing costs for any product or service. 

Here are some talking points you may want to use in your contacts:

  • Advertising is critical to the economic health of our country.  Advertising for all products and services helps generate $6 trillion in U.S. economic activity annually and supports more than 21 million jobs.  The current state of our economy requires that we create more sales and jobs - not adopt policies that would eliminate them.
  • The tax code permits all companies to deduct the cost of advertising, including pharmaceutical companies.  The deduction of the cost of advertising is no different from the deduction of other ordinary and necessary business expenses, such as employee costs, rent and other costs.  This proposal would put Congress in the position of picking and choosing favored products and using the tax code as a political weapon.  Which industry would be next?
  • Denying the deduction for marketing costs for one industry would be unprecedented.  Singling out the pharmaceutical industry for differential tax treatment would raise very serious First Amendment concerns.

It is critical that you make these contacts immediately.  ANA is working with all other marketing and media associations to let Congress know that we stand united in opposition to any attack on ad deductibility.

A copy of ANA's letter to the tax-writing committees is available here and a letter from The Advertising Coalition is available here.

If you have any questions about this matter, please contact Dan Jaffe (djaffe@ana.net) or Keith Scarborough (kscarborough@ana.net) in ANA's Washington, DC office at (202) 296-1883.  Please let us know of any feedback you get from these contacts.