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Senators Push Back On Ad Deductibility Tax Change

A bipartisan group of 15 senators has written their leadership to ask them to protect the current treatment of advertising as a "fully and immediately deductible" expense.

As tax reform winds its way through Congress, they want to make sure that current tax treatment is maintained, which treats advertising the same as any other regularly occurring expense, like wages, rent, office supplies.

Anything that would constitute a tax on that advertising, i.e. making it more expensive by eliminating a business's ability to deduct the full cost of advertising in the year those costs are incurred "cannot be justified as a matter of tax or economic policy," the senators wrote this week.

The National Association of Broadcasters, NCTA: The Internet & Television Association and others have banded together to push back on any attempt to limit or eliminate the deductibility of the full amount of ad expenses in the year they were incurred. Not being allowed to deduct the expenses or having to spread the deductions over several years could discourage the spending that ad-supported media rely on.

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That change has been on the table as part of larger tax reforms being considered by Congress and pushed by the Donald Trump administration.

To make their point about what is at risk, the senators cite a study that found  advertising supports 20 million jobs and $5.8 trillion in U.S. activity, or almost 20% of total GDP.

The letter was directed to Senate Majority Leader Mitch McConnell (R-Ky.) and Minority Leader Chuck Schumer (D-N.Y.).

Among those signing on to the letter included Republican Sens. Rand Paul (-Ky.) and Roger Wicker (Miss.) and Democrats Ed Markey (Mass.) and Amy Klobuchar (Minn.).

Broadcasters have other allies on the Hill in the pushback. In May, a bipartisan contingent of more than a quarter of the membership of the House of Representatives called on congressional leadership—in this case the House speaker and minority leader—not to institute the deductibility change.