Tax Day and the Threat to Advertising

April 15, 2015

In an apparent symbolic gesture, the Senate Finance Committee chose April 15 as the day for the business community and other groups to provide their comments in regard to tax reform. The advertising community in particular has reason for extreme concern because of proposals put forward in the last Congress in both the Senate and House that threaten to radically transform the tax treatment of advertising.

These proposals would require advertisers, for the first time in this country’s history, to amortize or write off 50 percent of their advertising expenditures over 5 or 10 years. This change from the longstanding ability of advertisers to write off advertising expenditures immediately would impose an at least $169 billion in additional tax burdens on advertising over 10 years.

Recent data from IHS Global Insight, a world-renowned economic think tank, demonstrates that advertising annually creates multimillions of jobs and generates trillions of dollars for the U.S. economy.

Here are a few of the key findings:

  • Advertising supports 18.7 percent of U.S. GDP and 20.8 million of the 147.5 million jobs in the country
  • Each dollar spent on advertising expenses generates nearly $19 of economic output
  • Every $1 million spent annually on advertising supports 28 American jobs
  • IHS Global Insight’s studies have found that advertising has profound positive job and economic stimulus impacts in every state and congressional district in the U.S.

In its filing today to the Senate Finance Committee, ANA noted that the vast majority of our major free-market economic competitors, including those with far lower corporate tax rates than the rates presently imposed in the U.S., have not saddled advertising efforts with these types of severe economic burdens.

On Tax Day, ANA once again is calling on the Congress to maintain the present tax treatment of advertising in order to support the continued vigor and viability of this crucial sector of our economy.

Our detailed filing can be found here.

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