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ANA Looks to Thwart Taxes on Ads

2 Oct, 2013 By: Doug McPherson

NEW YORK – The Association of National Advertisers (ANA) is asking its members to call congressional members to thwart an effort to eliminate federal tax deductibility of advertising.

The ANA says the legislation that’s expected to be introduced by House Ways and Means Committee Chairman Dave Camp (R-MI) would require advertising costs to be amortized over three years.

The association also describes the threat as a “strong likelihood” that would significantly restrict what advertisers can deduct, and would make the amortization of ad costs much more complicated to administer, especially for small businesses.

Dan Jaffe, ANA’s executive vice president of government relations, says the effect could be chilling for the media industry, ad agencies and the national economy. “Right now, advertisers can deduct 100 percent of advertising,” Jaffe says. “Think about what that does for the media that is dependent on advertising – especially media like newspapers and magazines that are already struggling – if advertisers could only write off a third of the dollars they spend each year.”

Aside from the amortization plan, Jaffe says the effort could limit the percentage of advertising that would be deductible. In either case, he says the economics of ad spending would shift for marketers and their advertising and media supply chain.

In its appeal to members, the ANA cites what it calls a “widely accepted model” developed by Larry Klein, a Nobel Laureate in economics, which concludes that ad expenditures account for 20 percent of total economic output and 15 percent of the jobs in the U.S.

“Every dollar of ad spending generates just under $20 of economic output and every million dollars of ad spending supports 69 American jobs,” according to the ANA’s assessment of the study.

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