CBO Delivers Holiday Gift to Marketing Community (NOT!)

December 19, 2018

The Congressional Budget Office (CBO) has just delivered a lump of coal to the marketing community in the form of its latest version of “Options for Reducing the Deficit: 2019 to 2028.” The periodic report, also known as a “Congressional wish list,” describes forty different ways Congress could generate additional revenue through changes in the tax code. Option 27 is to “Require Half of Advertising Expenses to Be Amortized Over 5 or 10 Years.”

This option is not new; it has appeared in CBO reports for several years. There were very serious discussions about restricting ad deductibility when Congress considered major tax reform in 2017. ANA and the entire marketing community worked proactively throughout the year and we were successful in preserving our current tax treatment.

The continued appearance of the proposal in the new CBO report demonstrates how critical it is to remain vigilant on this issue. Advertising deductibility remains an attractive “pay for.” The Joint Committee on Taxation estimates that requiring half of advertising expenses to be amortized over five years would raise $63 billion in new revenue from 2019 through 2028. Requiring half of those expenses to be amortized over ten years would raise $132 billion over the same period.

The president has talked about some type of middle-class tax cut. Democrats will control the House next year and will very likely be looking for new revenue for their legislative priorities. In addition, due to retirements and election losses, there has been a major turnover on the House Ways and Means Committee, which writes tax legislation. There will be at least fourteen new members of that committee. There will also be several new members of the Senate Finance Committee.

ANA and our colleagues in The Advertising Coalition (TAC) are working to set up grass roots meetings with these new members. We have a powerful report which quantifies the economic impact of the advertising industry in every state and congressional district in the country.

Restricting the full deductibility of advertising is not a new idea, just a bad one.

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