Clark Rector Jr., Executive Vice President–Government Affairs
Tax Reform Unlikely Soon
As Congress prepares to leave Washington, DC for the August recess, the odds keep getting longer that comprehensive or corporate tax reform will happen before the next election. The remainder of 2015 is likely to be dominated by other issues, including funding the federal government and extending the debt limit, the highway spending bill and the Iran nuclear agreement. Tax reform is considered much too partisan to have a realistic chance of being enacted in 2016, a presidential election year. House Ways and Means Committee Chairman Paul Ryan, R-Wisc., has acknowledged that the issue will need to wait until after the election.
Earlier in July, the Senate Finance Committee released the reports of its bipartisan tax working groups. The Business Income Tax Working Group listed the amortization of advertising among many other possible revenue raising provisions. It estimated that amortization would raise $169 billion over 10 years. Most of the revenue would be raised in the first five years and very little after ten years.
The most likely threat to advertising deductibility would be in a comprehensive or corporate tax reform package. However, the possibility always exists that a member of Congress could propose limiting the full advertising tax deduction to pay for a pet project. AAF and the other members of The Advertising Coalition will continue meet with members of Congress to educate them about the economic benefits of advertising and urge them to oppose any future efforts to oppose limits on the full deduction of advertising expenses.
Ad Industry Preparing for Possible Tax Fight in Illinois
The advertising industry is preparing for the possibility of an ad tax fight in Illinois. Illinois Governor Bruce Rauner (R) and the Democratic controlled state Assembly are currently in a stalemate over the overdue state budget. An ad tax has not been proposed, but during his gubernatorial campaign, Gov. Rauner released an economic plan that included extending the state’s sales tax to many advertising services. The industry is preparing for the possibility that the plan may be formally introduced as legislation.
AAF and our Illinois advertising federations have joined with many Illinois and national association partners to create the No Ad Tax Illinois coalition and website. As with the federal issue, coalition members are working proactively to educate lawmakers as to the harm taxing advertising would cause to the state, the industry and consumers.
IWG Language in Appropriation Bills
Both the House and Senate Appropriations Committees have passed Financial Services funding bills that retain language prohibiting the Federal Trade Commission from moving ahead with implementation of the Interagency Working Group (IWG) proposed nutrition principles for food marketed to children without first conducting a cost-benefit analysis in accordance with a 2011 Executive Order prescribing regulatory courses of actions by federal agencies.
San Francisco Sued Over Ad Warnings
The American Beverage Association has filed suit against a San Francisco ordinance that requires health warnings in advertising for sugar sweetened beverages. The ordinance also places a moratorium on advertising those products on city property. The ABA lawsuit accuses the city of “trying to ensure that there is no free marketplace of ideas, but instead only a government-imposed, one-sided public ‘dialogue’ on the topic – in violation of the First Amendment.”
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