Advertising Biz Stunned by Draft Proposal to Cut Ad Deduction Ramifications for all media, but particularly struggling newspapers By Katy Bachman
Rep. Dave Camp, (R-MI)
Photo: Pete Marovich/Getty Images
Just as advertisers and media execs feared, Rep. Dave Camp (R-Mich.), chairman of the House Ways and Means committee, is proposing watering down the advertising tax deduction. Multiple sources have told advertising and media lobbyists that the measure, which could cost advertisers millions and reduce revenue for ad-supported media, has been written into a working draft of a tax reform bill.
The provision would allow advertisers to deduct only 50 percent of all ad expenses in the first year and amortize the remaining 50 percent over the next 10 years.
If Camp has his way, a tax reform bill will be introduced and clear the committee by the end of the year.
Lobbyists suspected this was coming, surprised that lawmakers all but ignored data showing that for every $1 spent on advertising, $20 in sales was generated, per IHS Global Insights.
Learning of the threat to all but obliterate what has been a recognized business expense for more than 100 years, advertisers and media lobbyist representing the major TV networks met Thursday to discuss strategy.
One lobbyist called the situation “DefCon 1.” “We take this more seriously than any other threat we’ve seen in many years. It’s a sweeping proposal,” said Dan Jaffe, evp of the Association of National Advertisers, following Thursday’s meeting.