As the days quickly fly off the legislative calendar, President Trump and congressional Republicans have declared the passage of tax reform to be a major goal for 2017. Viewing stronger economic growth and job creation as the life jacket for his floundering agenda, Speaker Paul Ryan began this new push by giving a major tax reform speech before the National Association of Manufacturers.
Although tax reform has been needed for more than a decade, and broadening the base by eliminating complex deductions is the best path forward, conservatives must remember to implement their change within the scope of liberty. The tax code should protect our rights, not take them away.
One idea floated by former chairman of the Ways and Means Committee, Dave Camp, in 2014 was changing how the cost of advertising is treated as a business expense. This must not be part of the new reform package. The advertising tax deduction is crucial to small businesses and changing it would create a domino effect that would stifle local economies. Building a successful brand and reaching new customers requires advertising. Not allowing ads to be deductible would be bad for business and kill an industry with tens of millions of jobs. Many companies, especially smaller businesses, would have to cut back if this proposal became part of the tax code.
Currently, businesses have the ability to deduct the cost of ordinary and necessary businesses expenses. These costs are best described as things paid for in order to keep the lights on: rent, utilities, employee wages, and other much-needed supplies. This deduction became codified in 1913 and has been a fixture of our tax code ever since. Advertising has always been considered a part of the listed allowable deductions and considered an ordinary and necessary expense. Some in Congress, however, have begun kicking the tires on taxing paid publicity.
Originally published by the Daily Wire, written by Matt Chisholm.