Could this Mad Plan Harm the Mad Man?
Congress is thinking about eliminating the tax deduction for advertising expenditures -- but is that a good idea?
This has been good news for advertisers and everybody else in the ad biz, including media offering access to audiences, producers, writers, actors, etc., etc. But it appears that some in Congress have a new approach in mind. According to AdWeek, the House Ways and Means Committee, led by Chairman David Camp (R-MI), has discussed the possibility of repealing the deduction available for advertising expenses. The problem with imposing any such limitations should be obvious. A change in the tax treatment of ad expenses could potentially add hundreds of millions of dollars to marketers’ tax bills. That, in turn, would discourage, rather than encourage, advertising, which could significantly reduce ad budgets. And that would significantly reduce revenue for ad-supported media and the broad universe of industries (e.g., production, copywriting, acting) symbiotically linked to advertising. A restructuring of the ability to expense advertising fees would affect the media and advertising industries in much the same way that elimination of the mortgage interest deduction would upset the home lending and housing market. Some representatives of the broadcast industry have recognized the storm clouds looming and have tried to get ahead of the problem.