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Advertising Deductibility 

Through 100 years of business history, US companies have deducted 100% of their advertising expenditures as an, "ordinary and necessary cost of doing business." Similar to employee payroll, office rent, utilities, and other expenses, advertising is considered a standard business deduction under the US tax code. Any change to the tax treatment of advertising poses a serious threat to agencies and other businesses that rely on advertising spending. 

Two recent proposals in Congress may significantly change the deductibility of advertising. Legislation has been drafted by the Senate Finance Committee under Chairman Max Baucus (D-MO) and a similar plan is underway in the House Ways and Means Committee under Chairman David Camp (R-MI). These proposals require that businesses deduct only 50% of costs in the year the advertising runs and amortize the deduction of the remaining 50% over five to ten years. This has the fundamental effect of becoming a tax on advertising and would reduce advertising spending levels as a result. Such a reduction would impact ad agencies directly –and can adversely affect entire local economies and job bases where agencies and advertising-related businesses play such important roles.

Current 4A's Advocacy

4A's has taken brisk action to address this threat, the most significant our industry has faced in decades. The Board of Directors of the 4A's has written Congress to express opposition to the current tax proposals. This is the first time that the 4A's leadership has collectively voiced opposition to government policy. Additionally, 4A's CEO Nancy Hill has called for the broader advertising community to get involved and contact their members of Congress on this critical issue.

4A's is a founding member of The Advertising Coalition, a cooperative of advertising, broadcast, media and publishing organizations. In this capacity we have facilitated outreach and discussions between 4A's members and members of Congress on the very real impacts that any change in tax treatment poses for the advertising industry.

• "Grassroots meetings" have been held in the local district offices of members of Congress in Florida, Georgia, Kansas, Kentucky, Louisiana, Minnesota, Missouri, Ohio, Pennsylvania, Tennessee and Texas.

• 4A's members that have played active and valuable roles include: Leo Burnett and Abelson Taylor (Chicago), G2 Interactive and Latitude 39 (Philadelphia); Bohan Advertising (Nashville); LAUNCH, The Richards Group and TM Advertising (Dallas); Eric Mower & Associates, Fitzgerald & Company and 22 Squared (Atlanta); Sides & Associates (Lafayette); and, Fahlgren Mortine, and Conrad Philips Vutech (Columbus).

• The Advertising Coalition and its members have sent letters to every member of Congress who serves on the House Ways and Means, House Budget and Senate Finance committees.

Please contact the 4A's Washington Office if you would like to participate in the 4A's outreach efforts including grassroots meetings that 4A's Washington facilitates. 4A's member participation is critical to preserving the deductibility of advertising.

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