Advertising tax deductibility challenge looms in 2014

A new issue has been added to the now standard mix of issues facing New Hampshire’s broadcasters.  The “usual suspects” are still present; retransmission consent, the television spectrum auction  and reallocation (which has been delayed until 2015) and radio’s performance tax.

Congressman Dave Camp
Congressman Dave Camp

Congressman Dave Camp (R-Mich.) and Senator Max Baucus (D-Mont.) have each introduced proposals that would drastically affect businesses ability to deduct advertising costs on their corporate tax returns.

Camp, who chairs the House Ways and Means Committee, introduced his proposal in late September which calls for businesses to take only a 50% deduction for advertising costs in any given year, with the remaining 50% amortized over the course of the following ten years.

Senator Baucus’ proposal isn’t much better, stating that the “other” 50% of advertising costs be amortized over a five year period.

Currently businesses can deduct costs for advertising on radio, television, outdoors and online as well as the costs for advertising agencies and the costs of copyrighting logos and slogans.  Promotionally, businesses can deduct business card and flyer expenses, sponsorships and the costs associated with holding special events for customers.

It doesn’t take a math degree to see that these are massive deductions for companies both big and small.  The impact to broadcasters is obvious, reduced spending across the board.  According to an AdWeek article “almost $6 trillion of the U.S. economy is generated by advertising, as well as almost 15 percent of jobs.”

Dozens of organizations have come out against the proposed tax reform.  From the National Association of Broadcasters and the NHAB to the Association of National Advertisers, advertising agencies and chambers of commerce organizations have expressed how these changes would have a devastating effect on the economy.

Stay tuned to NHAB.org and the NHAB Facebook page for updates. For more information on all of the issues facing broadcasters, log on to the NAB’s issue pages for radio and television.

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