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How Tax Reform is affecting Advertising

by Bradlee Colburn

The latest in tax reform

House Republicans are set to reveal their long-awaited tax reform legislation to the public this week. In providing the first comprehensive rewrite since 1986, the Republicans are seeking to lower the corporate tax rate, lower the rate on pass-through business profits, and provide middle class tax relief. In exchange for these tax cuts, new legislation could limit or eliminate some popular tax breaks in an effort to make up the difference. Put simply, revenue lost to one cut must be made up by a gain from another source. As a result, special interest groups are monitoring and lobbying lawmakers in an effort to preserve their constituents’ tax breaks. The House is hoping to send a bill to Senate by Thanksgiving as pressure mounts to pass meaningful legislation on tax reform.

Thanksgiving or Taxsgiving for advertising industry?

The GOP’s Blueprint for tax reform was released this past September and does not specifically mention advertising. However, it does mention the repeal and retention of other business credits “to the extent budgetary limitations allow.” We will know more when the full legislation is released to the public, though it should be noted that to pay for the tax reductions, including advertising. A tax on advertising might appear as it did in 2014, as a change to the tax treatment of advertising expenses from a normal and necessary business expense to a 50% deduction instead. Despite all the lobbying and lawmaking, we will simply have to wait until the plan is fully revealed to know more.

I don’t want a tax in my turkey though!

In AAF’s latest Legislative Alert on the issue, it proclaims, “Advertising is at great risk,” and encourages members and advertising professionals to contact Senators and Representatives while urging them to “oppose any effort to place a tax on advertising.” This echoes statements made by other industry groups including the Association of National Advertisers and The Advertising Coalition. According to industry advocates, the effects of a tax on advertising would be significant, as advertising supports 20 million, or 14 percent, of the jobs in the U.S. Several other conclusions from advertising advocacy groups can be found and here. The key take away is this: Although an advertising tax has not been specifically included in any current proposals or packages thus far, the advertising industry must remain vigilant in opposing a potential tax on advertising.

What you can do now

AAF chapters in Alabama have drafted a letter (linked here) titled “Don’t Kill the Advertising Tax Deduction” and they are requesting as many signatures as possible from local membership and business owners. There’s also a study of advertising’s impact on our districts (4 and 7 linked here and here) that contains lots of useful information and talking points as well. Please sign and email the letter to with your signature. You can also contact your local Senators and Representatives and encourage them to oppose an advertising tax. Finally, stay tuned to AAF and news for the latest on this situation as it develops.

Read the AAF Ad Tax Petition >>
Read Ad Study 2015 for the 7th District >>
Read the Ad Study 2015 for the 4th District >>