Advertising Should Remain Fully Deductible Under the Tax Code

The House Ways and Means Committee and the Senate Finance Committee have recently held hearings on reforming the corporate tax code as tax reform efforts are starting to ramp up.  

There still, however, is no clear consensus on how Congress will or should proceed. Speaker Paul Ryan and House Ways and Means Chairman Kevin Brady continue to strongly push a tax reform plan called “A Better Way.” One of the key components of that approach is a border adjustability tax. Treasury Secretary Mnuchin, on behalf of the Trump Administration, released a one-page statement on tax reform which did not include border adjustment, and he subsequently made several statements skeptical of the border adjustment approach. Meanwhile, Senate Finance Committee Chairman Orrin Hatch has indicated that he will adopt a different approach to corporate tax reform, apparently following a more traditional model.  

If the border adjustability provision is dropped, that leaves a more than one trillion dollar hole in the plan to make major reductions in corporate tax rates. There has been no discussion in the hearings so far on how to pay for corporate tax reform, but we are not waiting around.

ANA is committed to preserving the full deductibility of advertising costs as an ordinary and necessary business expense. We were a founding member of The Advertising Coalition (TAC), a group of associations and companies representing the entire advertising and marketing ecosystem. TAC submitted detailed comments last week to the Ways and Means Committee describing why mandating the full deductibility of advertising costs is good for the economy, businesses and consumers, and that it should not be limited as part of the tax reform effort.

TAC members also organize grassroots meetings with key members of Congress to describe the importance of the advertising community in their state or congressional district. We continue to actively hold these meetings with ANA member participation.   

In whatever manner Congress proceeds with tax reform, we will continue to make the case that the current tax treatment of advertising costs should be maintained as a major factor in boosting economic activity and job creation in the U.S.