As president of Ad Club, I recently witnessed the importance of having a collective industry voice to support the business side of advertising. In April, I joined Denver media and advertising executives in a meeting with Senator Michael Bennet to discuss how the initiative to tax advertising would negatively affect business and jobs.
There is considerable pressure on Congress and the Administration to find new revenues to pay for reforming the Tax Code. Recently, a $169 billion tax on advertising was proposed to help pay for tax reform bills. This would have allowed advertisers to deduct only half of their advertising costs when incurred and spread the remainder over up to ten years.
The goal of our meeting was to brief Senator Bennet on the importance of advertising to Colorado and the risk taxation poses:
Advertising helps generate $102 billion in economic activity in Colorado and helps to support 375,390 jobs.
If the cost of advertising is not deductible, advertisers will cut media budgets, jeopardizing employment for agencies, media companies and related businesses.
Many advertisers need to drive short-term sales, so amortizing advertising costs over 10 years doesn’t make economic sense.
As a member of the Committee on Finance, Senator Bennet will play a preeminent role when Congress takes up tax reform. While he admitted not having yet developed a position on the tax, Senator Bennet pledged that he would let us know if tax reform increases momentum and includes a limit on the deduction for advertising costs.