The United States government needs money. Wars and
recessions can do that to your financial health. They also want to lower
corporate taxes to be more globally competitive. I guess that leads to some
very different ideas being put on the table...and some stay there.
Early last month David Camp the chairman of the House Ways
and Means Committee brought forward a draft tax reform package fully bent out
of shape by lobbying efforts. In an effort to offset proposed corporate tax
breaks he is recommending a wholesale change to the way in which adverting is
expensed for tax purposes.
Camp is proposing that the first 50% of advertising costs are
expensed in the year they are incurred and are tax deductible (like most other
business expense). The deduction on the balance would be amortized over the
next ten years. Apparently this passes for tax “simplification”. The impact of
a change like this would be significant reductions in near term media spending
and all that implies. Needless to say, agency, media, marketing jobs would go
away. It would undoubtedly affect Canada as well.
Thankfully, what started as bi-partisan tax reform has
quickly become no party non-reform. The general belief is that this bill will
never make it to the floor for a vote this year. Mr. Camp has also recently announced that he
will not be running for re-election this year, making it unlikely that anyone
will provide the impetus to move these reforms forward.
It still scares the heck out of me! Where on earth did it
come from and can you put that genie back in the bottle? Once an idea like this
gets floated it can be tough to sink. The advertising industry lobby will be
doing their best to kill it once and for all.
I know that Tony Clement is not on my distribution list. I don’t think
he reads Ad Age and I suggest that you NOT tell him about it.
You can read more about it, or at least verify that I am not making it up in the Adweek article here.
