DC visits glean state of play on Performance Royalty, Ad Tax

posted on 3.06.2017

With federal tax reform efforts solidly underway in DC and a wholesale update of the nation’s copyright laws potentially in the offing, TAB led a group of 16 broadcasters last week to meet with nearly the entire Texas congressional delegation to reinforce the industry’s concerns about both legislative undertakings.

The take-away from our meetings was clear:  Congress is wholly focused on executing the new administration’s top policy goals in what members widely anticipate is a very short window of opportunity before the 2018 election season begins – a season they fear will cost significant Republican losses as a sign of voter displeasure with Donald Trump.

Ad Tax

Tax, healthcare and immigration reform are at the top of the agenda, and when it comes to tax reform it appears that lawmakers are planning a comprehensive rewrite – not just a few tweaks here and there.

TAB was strongly advocating for preserving businesses’ full deductibility of advertising costs in the year they’re incurred and the message was generally well-received. TAB shared research findings that advertising drives 15 percent of the Texas economy, generating $550 billion in economic activity yearly and supporting 1.7 million jobs.

To the extent that members were able to share insight into the framework under consideration (the draft plan was firmly under wraps at the time), preserving all existing “cost of doing business” exemptions appeared to be likely, but dependent on Congressional embrace of a new Border Adjustment Tax. If Congress rejects a BAT, individual deductions such as the one for advertising could be on the table for wholesale or partial elimination.

Performance Royalty

While an overhaul of the nation’s copyright laws is not on the Trump agenda, House Judiciary Committee Chairman Bob Goodlatte, R-Virginia, is reportedly eager to wrap up such an effort before his term as chairman ends in 2018.

Numerous music royalty issues are in play in such a rewrite, and broadcasters are striving to ensure that imposing a new performance royalty on Radio broadcasters – characterized by NAB as a “Performance Tax” – is off the table. Such a royalty would be in addition to the hundreds of millions of dollars broadcasters collectively pay annually to performance rights organizations such as ASCAP, BMI, SESAC and now GMR.

While the majority of Texas members of Congress support their local Radio broadcasters, some are holding off on renewing their co-sponsorship of HConRes 13, The Local Radio Freedom Act, for at least a couple weeks while Goodlatte determines whether there might be any potential compromise between the RIAA and the broadcast industry – an unlikely scenario.

The resolution opposes adoption of a new performance royalty on Radio stations and is co-authored by Texas Congressmen Mike Conaway, R-Midland, and Gene Green, D-Houston. For the past several sessions of Congress, the measure has gained a strong majority of support from the House.

Update on Texas Co-Sponsors of HConRes 13

Texas broadcasters are encouraged to continue weighing in with their Members of Congress on both issues. Lawmakers are slated to be in their districts April 10-21 in part for observance of religious holidays.

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

---