Government Relations: Advertising Deductibility

AAF Colleague:

Thank you to everyone who contacted their Representatives and Senators after my previous alert on tax reform. I am writing to once again ask for your help.

Senators John Boozman, R-Ark. and Tammy Baldwin, D-Wisc. have co-authored a bipartisan letter to the Senate leaders urging them to maintain the tax treatment of advertising as a normal and necessary business expense fully deductible in the year it is incurred. The text of the letter is below. It is similar to the Engle-Yoder letter sent to House leadership last fall and signed by 124 members of the House of Representatives.

Senators Baldwin and Boozman are soliciting signatures from other Senators for the letter. Please contact your Senators and ask them to sign the Boozman-Baldwin letter on advertising deductibility. Let them know it is important to you and your business that the tax treatment of advertising remain unchanged. The more signatures on the letter, the stronger our position will be in the Senate. Contact information for all Senators can be found here.

I would appreciate hearing of any responses you get from either of your Senators. Please let me know if you have any questions or comments, and thank you for your continued help on this important issue.

Sincerely,

Clark Rector
Executive Vice President-Government Affairs
American Advertising Federation
crector@aaf.org
202-898-0089
Follow me on Twitter @ClarkRector1

Text of the Boozman-Baldwin letter:

Dear Leaders McConnell and Schumer:

This Congress, we have the opportunity to enact much-needed, meaningful tax reform. As we work with you on these efforts to bolster economic growth, close loopholes, and raise the incomes of working Americans, we respectfully request that you maintain the current tax treatment of advertising as a fully and immediately deductible business expense.

For the life of the tax code, advertising has been treated the same as all other regularly occurring business expenses, such as employee wages, rent, utilities, and office supplies. Any measure that would tax advertising – and therefore make it more expensive – cannot be justified as a matter of tax or economic policy. Moreover, such a proposal would run counter to a major goal of tax reform we can all agree on – simplifying the tax code.

Businesses across the country rely on advertising and promotional products to inform potential customers, generate sales, and support workers across our nation. According to a 2014 study by IHS Economics and Country Risk, advertising supports 20 million U.S. jobs and $5.8 trillion in U.S. activity. That advertising contributes to 19 percent of our nation’s GDP and is responsible for supporting the high-quality news and information we all rely on.

As the Senate continues to work towards tax reform, we ask that you continue to support local businesses and recognize the importance of advertising on jobs and the economy.