Ad. Tax

Samuel Holbrook, Reporter

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The tax on ads was proposed by the House Ways and Committee Chairman Dave Camp which allows companies to deduct 50% of their advertising costs in the year that they are incurred in the Spring of 2017,  but it ended up being denied by the Senate. Almost everything nowadays has tax.  Now the government wants to have the advertising tax which means less sales and more people losing their jobs and their businesses. A tax on advertising will mean that for every $100 dollars spent on advertising, $10 will now go to the government.

For large companies with big advertising budgets, the policy change would be a nuisance in the short-term, but ultimately it would only delay not limit the destructibility of advertising expenses. The change would clearly increase the after-tax cost of advertising for the company in the short run, but it probably wouldn’t prompt the company to slash its spending on ads. Businesses spent roughly $140 billion on advertising in 2012 — depending on what’s included in the figure. If only half of that figure were deductible, the Treasury would have theoretically netted an additional $24.5 billion at the current 35% corporate tax rate.

 

http://adage.com/article/news/proposed-ad-tax/290918/

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Ad. Tax