Advertising still a Tax Target

July 9, 2015

The U.S. Senate Finance Committee released the reports of its five bipartisan tax working groups yesterday. These working groups were tasked with coming up with new and creative avenues for tax reform by examining various aspects of the code. This is the latest in a recent push by the Finance Committee on the tax reform issue. In January, the formation of the working groups was announced to coincide with the kickoff of a series of tax reform hearings. Then in March, after five hearings, the Committee announced it would ask stakeholders and the public to submit ideas to the bipartisan working groups. ANA submitted comments to the Business Income Tax Working Group, and all submissions were released to the public in April.

Since advertising was first singled out for amortization in the tax reform proposals by the former Chairs of the Senate Finance and House Ways & Means Committees, Sen. Max Baucus and Rep. Dave Camp, in 2014, we have been especially vigilant in watching for any new suggestions that are put forth impacting advertising. In its report, the Business Income Tax Working Group did not explicitly single out advertising amortization or suggest that advertising amortization was a necessary component of the package. However, advertising did not escape notice entirely. Amortization of advertising was third on the list of the largest revenue raising options in the report (pg. 19), although the report also stated that there were potential tax timing and market disruption aspects for each of the categories on the list.  

As Congress looks to find new sources of revenue to support corporate tax reform, advertisers will continue to see amortization as a clear and present danger. It is vitally important that the advertising community work together to show lawmakers the importance of our industry and the extreme economic harm that would be caused by the imposition of amortization proposals. A report put together by the renowned economic research firm IHS demonstrates that advertising is a primary driver of jobs and economic activity in the U.S. Clearly, saddling the selling effort with increased tax burdens would depress these positive economic benefits. While we may never completely remove ourselves from Congressional scrutiny, we will rekindle our efforts to counteract proposals to hobble advertising with inappropriate tax disincentives.

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