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PROPOSED TAX CHANGE COULD CREATE ADVERTISING SPEND CLIFF
Nov. 26, 2013
Paulsen Marketing reports:
Legislation currently proposed would eliminate the deduction corporations now take on advertising costs as a business expense.
In an effort to reduce the current overall corporate tax rate from 35 percent to 25 percent, a number of tax changes are under consideration that lawmakers believe will offset the loss of funding.
Most critical to agri-marketers is a proposal under consideration by the House Ways and Means Committee that would change the current deduction of 100 percent of advertising costs to only 50 percent in the year the advertising runs - with amortization of the remaining 50 percent over 10 years.
On the Senate side, Finance Committee Chairman Max Baucus proposes similar legislation with a term of five years for amortization of the remaining 50 percent of the deduction.
According to IHS Global Insight, advertising supports 20 million U.S. jobs or 15 percent of all jobs in the U.S. If this proposed legislation passes, ad sales could be reduced by as much as $446 billion, with 1.7 million U.S. jobs placed at risk.
AdAge.com is monitoring the issue and indicates a possibility the legislation will be finalized before the end of the year.
Paulsen Marketing asks that all agencies, corporate marketers and media partners call their House and Senate representatives to remind them of the critical roll agri-marketing plays in agriculture and the U.S. economy.
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