AAF Government Alert: Ad tax update

AAF Government Alert: Ad tax update

RAPID CITY, S.D. (Sept. 25, 2013) – Senior staff members of the House Ways and Means Committee have confirmed that limiting the full federal tax deduction for advertising expenses continues to be under consideration. They have said there is a strong possibility that the ad tax could be in the initial version of the tax reform legislation that Committee Chairman Dave Camp, R-Mich., hopes to release later this fall.

AAF national encourages members of local AAF chapters to contact the offices of Committee members as soon as possible and express strong opposition to such a proposal. AAF stresses that this action is especially important if you live in a Committee member’s district.

The organization states that a tax on advertising would cost the nation millions of jobs and hundreds of millions of dollars in lost economic activity. It offers documentation of this direct impact in a landmark study of the economic impact of advertising on the U.S. economy.

Advertising – local, regional and national – generates $5.6 trillion in total economic activity for our country and helps support 22.1 million jobs in the U.S. economy. The stimulus generated by advertising brings jobs and sales to every state and to every congressional district. Even a modest reduction that limits the amount a business may deduct of its total advertising spending could cost the nation 1.6 million jobs and $419 billion in economic sales activity.

AAF adds that there is no economic or practical justification for enacting a limit on the deduction of advertising costs. The Tax Code has rightly permitted this deduction for the 100-year life of the corporate income tax. It is not a special preference or deduction, it is a normal and necessary expense that a business must pay to communicate with customers and generate sales.

The chances that tax reform will be enacted this year or next remain remote. However, any bill introduced or considered in Ways and Means may well become the baseline for future years. As such, AAF underscores that it is critical that members do all they can to ensure that an ad tax is not included.

The members of the Committee can be found on the Ways and Means Committee website. Most have configured their contact section to only accept emails from constituents. However, they can still be reached through their Chiefs of Staff. Contact information is listed below.

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