House Ways and Means Chairman Dave Camp Releases Draft Tax Reform Legislation

As expected, Chairman Dave Camp of the House Ways and Means Committee released a draft tax reform proposal today. As we had heard, Chairman Camp’s plan would require the amortization of certain advertising expenses beginning in 2015. This amortization plan marks a drastic departure from the historical treatment of advertising as an ordinary and necessary business expense, which has allowed it to be virtually one hundred percent deductible in the year in which the expense is made.

Under the plan, 50 percent of certain ad expenses would be deductible currently, and the other 50 percent would be amortized over a ten year period. This amortization would phase in over a period of years until 2018. The provision allows for the first $1 million of advertising expenditures to be deducted, with a reduction of the $1 million for companies whose advertising costs are greater than $1.5 million and a complete phase out of the $1 million for companies whose advertising costs exceed $2 million. A complete description of the ad amortization plan can be found on pages 56 and 57 of the Section-by-Section Summary and pages 362-69 of the draft legislation.

We need your help. Please contact members of the House Ways and Means Committee that your company has close relationships with and stress to them the importance of maintaining the full deductibility of advertising expenditures.  A list of Committee members can be found here, and a list of key staffers is available here. In order to help guide your outreach messaging, ANA has put together a list of talking points. Additionally, we have put together a website with a number of materials on the ad tax threat, including an economic study demonstrating the benefits of advertising. Our press release on today’s proposal can be found here.

While ANA supports tax reform and the lowering of corporate tax rates, we do not believe it would be appropriate to use advertising to fund this reform effort. If enacted, this proposal will cost advertisers billions of dollars. Chairman Camp stated last week that it was “time to take on the special interests.” Advertising has never been treated as a special interest exemption before, and it must not be treated as one now. Tell Chairman Camp and members of the House Ways and Means Committee that advertising is part of the lifeblood of our economy, not a special interest exemption to raid for lost dollars elsewhere.