Broadcasters pressing Congress to oppose back-door Ad Tax

posted on 11.18.2013

 - Another Texan supports radio against Performance Tax

GOP Congressman Roger Williams, whose district stretches from Central Austin to Fort Worth’s Tarrant County, is the latest Texas lawmaker to sign on as a co-sponsor of H Con Res 16, the Local Radio Freedom Act that opposes forcing a performance royalty or tax on radio broadcasters.

“We’re delighted to have Rep. Williams’ support and appreciate his taking a stand on broadcasters’ behalf – he certainly deserves a round of thanks,” said TAB President Oscar Rodriguez.

Pro-Radio co-sponsors now number 172, with a goal of 218 to reach a majority. 

The record labels’ latest legislation, advanced by Rep. Mel Watt, D-North Carolina, has one co-sponsor.

On another front, Texas broadcasters are calling on their members of Congress to expressly oppose plans under consideration by GOP members of the House Ways and Means Committee to slash businesses’ tax deduction for advertising costs.

“If you haven’t already been on the phone with your local members of Congress, I urge you to take action now in order to keep this back-door Ad Tax idea from gaining traction,” Rodriguez said.

TAB has been pressing the issue with Texas’ members of the tax-writing committee since late August, beginning with a meeting with Rep. Sam Johnson, R-Plano, in his hometown. 

Member stations have received repeated updates since then by direct email and TABulletin reports.

“We’re pleased with the support we’re getting and it’s apparent that if broadcasters, advertisers and ad agencies continue to make the case to lawmakers we can squelch this ill-advised scheme.

“While it’s possible that Republicans will drop the idea to avoid anything that appears like a tax hike just as the mid-term election season commences, the ongoing budget standoff and likelihood for another round of across-the-board cuts to military and other key government programs are a significant threat we can’t ignore,” Rodriguez said.

The plan under consideration would require 50 percent of all advertising costs to be deducted in the first year, with the remaining 50 percent amortized over the subsequent 10 years. 

A group of multinational corporations is advancing the idea as a gimmick to reduce the nominal corporate tax rate from 35 percent to 25 percent.

Texas members of the House Ways and Means Committee include Reps. Sam Johnson, R-Plano; Kenny Marchant, R-Irving; Kevin Brady, R-The Woodlands; and Lloyd Doggett, D-Austin.

Broadcasters are encouraged to contact their lawmakers even if they don’t serve on Ways and Means with a request that they weigh in with committee members and oppose the back-door Ad Tax plan.

Members of Congress can be contacted though the U.S. House of Representatives website. 

Just enter your zip code in the upper right hand corner to find your Representative and a link to his or her webpage.

Talking points follow and broadcasters are asked to alert TAB with reports on their conversations with members or their aides.

Preserve the current standard business deduction for the cost of advertising

• The House Ways and Means Committee has developed draft legislation that would impose a tax on advertising. Today businesses may deduct 100% of the cost of their advertising. The proposal would allow only 50% in the year the ad runs and require a business to spread the remaining amount over 10 years. IHS Global Insight estimates this could reduce sales in the U.S. by $446 billion and place 1.7 million U.S. jobs at risk.
• The Tax Code for 100 years has permitted businesses to deduct the full cost of their advertising, just as it permits the deduction of other ordinary business costs like salaries, rent, utilities and office supplies.
• Advertising expenditures generate sales activity in the U.S. economy amounting to $5.8 trillion. That is 20 percent of the total national economic output. It also helps support 20 million jobs or 15% of all jobs in the country.
• Nobel prize-winning economists who have looked at the advertising deduction have concluded that nothing in the economic literature justifies a change in tax policy.
• It makes no economic or common sense to make businesses pay more for advertising thereby causing a decline in ad spending and the sales advertising generates.

Questions?  Contact TAB's Oscar Rodriguez or call (512) 322-9944.

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