Senate Committee Adds to Ad Tax Battle

WASHINGTON The ad tax battle has worsened.

Senate Finance Committee Chairman Montana Democrat Sen. Max Baucus proposed a bill to allow businesses to deduct only 50% of their advertising costs in the tax year they are incurred and amortize the other half over five years.

The move comes as the House Ways and Means Committee Chairman Michigan Republican Rep. David Camp is also looking to limit ad tax deductibility, we've reported.

Advertising lobbyists, NAB and the National Alliance of State Broadcasters Associations have warned changing or removing advertising deductions can have devastating consequences on U.S. businesses. NASBA has told lawmakers advertising is the primary source of revenue for most broadcasters: Local radio stations currently receive 96% of their revenues from advertising and televisions receive 94%.

NAB and the thousands of local radio and television stations in our membership strongly oppose limits that would be placed on the ability of businesses to annually deduct costs of advertising, said association EVP Communications Dennis Wharton. NAB is optimistic Congress will fully retain the ad tax deduction, which is an engine for economic growth and job creation, he added.

Senate Majority Leader Sen. Harry Reid (D-Nev.), has said any tax reform could raise $1 trillion to replenish the U.S. Treasury while House Republicans believe any savings go to reduce the corporate tax rate and the top tax rate for individuals.

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