Legislative Agenda: What Could Losing Advertising Deduction Mean for the Industry?

There are two ways to look at 2016 from a political standpoint. President Obama will be looking for a few crowning accomplishments in the final year of his two-term presidential saga, and what better way to go out on a high note than to sign off on some bipartisan legislation?

If you listen closely enough, you can actually hear Republican eyes rolling. The second path, espoused by pessimists (but ultimately more realistic) is that because a presidential election looms in November, not much is going to be accomplished. Campaigning will take the place of any actual legislation getting pushed through. There are a couple of items that are extremely likely to see activity post-election (more on this shortly) but, in the interim, the printing industry’s interests can be promoted on a couple of fronts.

As always, we turn to the printing industry’s leading legislative advocate/veteran lobbyist Lisbeth Lyons—the vice president of government affairs for Printing Industries of America (PIA)—for the lowdown on what hot button topics will be pursued during the weeks and months leading up to the presidential election. We will give you one agenda item per day—like a vitamin—to help (but not overtax) that heart of yours.

Advertising Deduction

Since advertising is considered an ordinary business expense, it can be deducted, thus lowering a company’s taxable income. However, one of the unfortunate elements of tax reform measures that were kicked around in 2015 involved revenue raisers, particularly one that would eliminate the 100 percent tax deductibility of advertising.

The printing industry becomes an unfortunate casualty under such a scenario. In the event clients are not allowed to deduct their advertising expenses, it stands to reason that they would soon budget less for their print spending. If passed, this could be extremely painful for the printing industry.

As a sidelight to the pressures being brought to bear, the American Medical Association’s board of directors passed a resolution calling on Congress to ban advertising for pharmaceuticals. While on the campaign trail last fall, Hillary Clinton echoed that sentiment in response to the pharmaceutical industry’s massive price-gouging tactics with a number of drugs. Another easy target is companies that target junk food to children under the age of 13, which obviously helps contribute to childhood obesity.

“Obviously, we don’t take a position on these issues, but we bear the brunt if there’s an effort to eliminate the tax deductible for advertising or ban the advertising altogether,” Lyons says.

The last proposals advanced to the House Ways and Means Committee and the Senate Finance Committee both called for the elimination of advertising deductibility as a way of helping to pay for a comprehensive tax reform package. Though those proposals died quietly, it is one of the post-election priorities that is bound to gain traction.

Lyons believes it is critical for PIA members, especially those with facilities located in districts represented by influential Ways and Means Committee members (where all tax proposals must originate), to communicate the unintended consequences of eliminating the deductions. “Hopefully, we can take this off the table as a potential revenue raiser going forward,” she adds.