Federal tax cutting effort still averts Ad Tax

posted on 11.20.2017

Tax cut legislation now moving in both chambers of Congress continues to preserve the full deductibility of businesses’ advertising costs in the year they’re incurred. But the growing price for such cuts – now estimated to reach as high as $2.2 trillion in additional federal debt under the Senate plan – and a last-minute push to repeal one tax that serves as the underpinning of the Affordable Care Act could jeopardize the effort altogether.

The House last week approved a proposal shepherded by Texas Rep. Kevin Brady, R-Conroe, which limits growth in the federal deficit to $1.5 trillion and leaves in place the ACA tax for Americans who choose not to purchase health insurance. Still, changes to tax treatment of mortgage interest and local taxes has made the lower chamber’s measure unpopular with key industry groups, and the Senate’s version includes even more restrictive versions of those politically toxic components.

The measure was the culmination of a multi-year effort by Brady, who chairs the House Ways and Means Committee, to cut federal taxes in a way that boosts sufficient economic activity to offset the cuts in revenue to federal coffers.

Differences between the two chambers’ approaches will be hammered out in a joint conference committee which has has been anticipated from the outset of the effort. The White House wants the tax cut package on his desk before lawmakers break for the holidays, but it’s far from certain whether that’ll happen and some observers are suggesting the fight could extend into 2018, a mid-term election year.

TAB has worked tirelessly to ensure Brady and other Texas members of the tax writing committee understand the importance of advertising to the economy, supporting the overriding efforts by NAB and the advertising industry.

The leadership of individual broadcasters throughout the state who have been engaging with their members of Congress on this issue for nearly three years has been key to TAB’s success in sustaining support from the state’s congressional delegation for preserving the advertising deduction.

Advertising drives more than $531.5 billion in economic activity in Texas alone and helps support nearly 15 percent of all jobs in the state. The advertising deduction has been in place since the tax code was first adopted more than a century ago. It is especially essential to new business creation, as a large percentage of businesses fail in the first five years of operation.

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

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