11 Dec calendar icon

Major Agency CEO’s Come Out Against Ad Tax Deduction Limits Letter from 4A’s board is a departure for group
By Katy Bachman

For the first time, the 4A’s board of directors, execs from the nation’s largest advertising agencies, have gone on record opposing the Senate proposal to limit the advertising tax deduction.

The letter, sent today, was in response to a proposal from Senate finance committee chairman Max Baucus that would reduce the ad tax deduction by half for the first year and amortize the other half over five years.

“The recent proposal from the Senate Finance Committee would severely undercut the economic power of advertising to generate sales and support jobs,” wrote more than two dozen high-profile agency execs such as Bill Koenigsberg, president and CEO of Horizon Media; John Montgomery, COO of GroupM Interaction; Tim Spengler, worldwide CEO of Magna Global; Matt Anthony, CEO of Young & Rubicam North America; and Lisa Donahue, CEO of Starcom Worldwide.

They cite research from IHS Global Insight that found every dollar of advertising generates $22 of economic output or sales and that every million dollars of spending supports 81 jobs.

Since tax reform proposals to limit the ad tax deduction come into play in the House and the Senate, the lobbying arms of the 4A’s, Association of National Advertisers and the Direct Marketing Association, among others, have gone into overdrive to try to fight them. But while it’s one thing for agency and advertising lobbyists to write letters and knock on the doors of lawmakers, the 4A’s board of directors have never personally joined the lobbying scrum.

“This is truly beyond the ordinary,” said the 4A’s top lobbyists and evp Dick O’Brien. “We wanted to stand apart and emphasize what a serious threat to the business this is.”

Katy Bachman is the Washington Bureau Chief for Adweek.