Tax Reformer Fights for Ad Deductibility

Americans for Tax Reform says that should be treated like other necessary expenses

A group that is all about reforming the tax code is warning against one change that could adversely impact any company—broadcasters, MVPDs, magazines—that deducts ad expenses or whose business is dependent on advertisers.

The National Association of Broadcasters, NCTA: The Internet & Television Association and others have banded together to push back on any attempt to limit or eliminate the deductibility of the full amount of ad expenses in the year they were incurred as part of broader-based tax reform. Not being allowed to deduct the expenses or having to spread the deductions over several years could discourage the spending that ad-supported media rely on.

Americans for Tax Reform agrees.

In a letter to the Hill, ATR president Grover Norquist says that while this year marks a "once-in-a-lifetime” chance to achieve pro-growth tax reform, one thing that should be left alone is the ability of businesses to deduct advertising costs.

He says treating advertising differently from other costs of doing business would distort the advertising code. 

"In total, advertising directly or indirectly supports almost 22 million jobs and $36.7 trillion in total economic output," Norquist wrote. "Every dollar of advertising spending generates $22 of economic activity. Advertising associated with local radio and television is alone projected to contribute more than $1 trillion in economic output and 1.38 million jobs."

He points out that one of the proposals in the Republican tax reform blueprint is to allow businesses to immediately deduct the cost of necessary expenses. He said that lawmakers should reject any proposal to remove the deductibility of the necessary business expense of advertising. 

"[T]aking the existing treatment of advertising costs in the other direction by forcing it to be depreciated over multiple years makes no economic sense and undermines both the economic gains and the rationale for moving to full business expensing," he told Congress. 

(Photo via Pictures of Money's Flickr. Image taken on Sept. 17, 2015 and used per Creative Commons 2.0 license. The photo was cropped to fit 9x16 aspect ratio.)