The advertising tax deduction is still in play as part of comprehensive tax reform. But this round, it’s only one of six options for squeezing more tax dollars out of the business community.
The six options were offered in the business income tax report, one of five bipartisan reports produced by working groups on the Senate finance committee. Sens. John Thune (R-S.D.) and Benjamin Cardin (D-Md.) headed up the business tax working group.
Unlike the former proposals put forward last Congress in the House Ways and Means and Senate finance committee working drafts, amortizing the advertising deduction over 10 years isn’t specifically recommended as part of a final package. But it is no. 3 on the list of discussed options to pay for tax reform.
“It’s good news and bad news – we weren’t singled out. But when you are highlighted and spotlighted, that’s always cause for concern,” said Dan Jaffe, executive vice president of the Association of National Advertisers. “We’re not out of the woods,” he added.
The report recognizes that there are business and economic implication connected with each of the options. But the report also notes that amortizing advertising expenditures would result in additional tax revenue for the federal government of $169 billion over 10 years – a juicy number that’s hard to ignore.
The top two major revenue-raising items listed are depreciation changes ($260 billion) and amortization of research and experimentation expenditures ($192 billion).
It’s not clear that any of the options will become actual proposals, but Jaffe said it is still important for advertisers to keep the press on lawmakers. Advertisers have already won over a few converts, such as Sen. Chuck Schumer (D-N.Y.).
“Making advertising more expensive would undermine a leading engine of the economy. Our data shows in every congressional district, advertising is a major source of jobs and major source of economic activity. We’re 19 percent of the GDP in the US,” Jaffe said.
The Senate finance committee has made significant progress on tax reform, but it will be tough to do a major tax rewrite this year. Congress is out in August and then it is faced with a looming budget, debt ceiling and tax extender battles and the mounting distraction of the election.