Tax overhaul stirs controversy

A federal attempt to eliminate or significantly reduce the amount of advertising that can be deducted for a business expense has generated some aggressive resistance, both on the Gulf Coast and nationwide.

That deduction, which benefits media companies that sell advertising and companies that buy ads, has been part of the tax code for decades. But Clark Rector, executive vice president for government affairs with the American Advertising Federation, says the deduction could become a sacrificial purge under a U.S. tax code overhaul. Beyond the possible deduction elimination, there's also talk of altering the amortization schedule in regard to adverting expenses.

“This makes no sense whatsoever in terms of economic policy,” Rector tells Coffee Talk. “The negative impact will far outweigh any benefits. It would be a disaster.”

Rector adds that if this proposal becomes reality, it will hit all businesses, not just ones that buy and sell ads through a variety of media outlets. “It would be devastating to the industry,” says Rector, “but we think this would also be devastating to the economy in general.”

An official tax reform bill, much less the advertising angle provision, hasn't been introduced yet — though Rector says his Beltway sources tell him the deduction elimination is a genuine possibility. Rector, to head the whole thing off, has spread the word with local groups nationwide, including the AAF Suncoast Chapter in Sarasota. Several online petitions have been set up to combat the proposal.

The tax overhaul would come out of the House Ways and Means Committee chaired by Dave Camp, R-Michigan. The committee was supposed to have a draft of a bill by October, says Rector. But it was delayed due to the federal government shutdown and, more recently, Affordable Care Act controversies. Rector now expects a draft by the end of the year. “They see advertising as a big piece of money,” says Rector, “where they can make up a great deal of lost revenue.”