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That’s right, in their quest to find the money they need to help finance health care reform , yet another group of U.S. Senators are trying once again to eliminate the current business tax exemption allowance for advertising and marketing activities associated with prescription drug advertising.
Please, right now, reach out and contact both of your U.S. Senators from Florida to express your disapproval. Complete details, as well as talking points, are provided in the message we just received from AAF Exec VP Clark Rector which appears below
Here’s the contact information you need to reach out to both of Florida’s Senators:
U.S. Senator Bill Nelson (D-Florida) U.S. Senator George LeMieux (R-Florida)
718 Hart Senate Office Building 356 Russell Senate Office Building
Washington, DC 20510 Washington, D.C. 20510
Phone: 202-224-5274 Phone: 202-224-3041
Fax: 202-228-2183 Fax: 202-228-5171
It is critical that you add your voice in opposition to this proposal. Thank you in advance for your prompt action.
Message from Clark Rector, AAF Executive VP, Government Affairs
October 20, 2009
To: All AAF Members
From: Clark Rector, Executive Vice President-Government Affairs
Re: Another Threat to Advertising Deductibility
Senators Al Franken, D-Minn., Sherrod Brown, D-Ohio, and Sheldon Whitehouse, D-R.I., have introduced legislation (S. 1763) to disallow the federal tax deduction for all advertising and marketing expenses for prescription drugs. The Senators have indicated they would like to have the proposal added to the health reform legislation and may offer it as an amendment when the measure is considered by the full Senate.
Please contact both of your Senators as soon as possible and express your strong opposition to any effort to deny the deductibility of advertising expenses. Talking points and contact information are both included.
• The federal Tax Code treats all advertising as an ordinary and necessary business expense. It is deductible in the year the expense is made along with all other business expenses such as rent, utilities, salaries and office supplies. To disallow this expense is to directly increase the cost of advertising and marketing by up to 35 percent for affected companies.
• Advertising is critical to the economic recovery of our nation. Advertising provides $6 trillion in sales and 21 million jobs in America. In these challenging economic times we cannot afford to make any form of advertising more expensive by taxing it. Basic economics demonstrates that if you make advertising more expensive, businesses will have to reduce their advertising budgets, and if there is less advertising there will be far fewer sales generated of goods and services.
• Advertising expenses must fit the budget like all other business costs. If advertising becomes too expensive, a business must cut back costs or reduce its work force or find other savings. All advertising, including advertising for prescription medications, helps pay for the cost of news and entertainment in print and television media. The proposed tax on advertising and marketing would cost advertisers billions of dollars a year, resulting in cutbacks in advertising – a bad policy any time – but particularly harmful to media and advertising businesses in this economy.
• It would violate the First Amendment to tax one type of advertising with the intent to discourage commercial speech about the advertised product. While Congress has broad discretion to grant or withhold many tax deductions or credits, The United States Supreme Court has said that even a tax can be unconstitutional if used the way this legislation has proposed – to tax speech about a product in order to make it more difficult and more costly to advertise that product. Because the tax makes this form of speech more expensive, it would violate the First Amendment because the suppression of this speech means consumers will receive less information.
• Advertising is protected because it is important to the daily lives of Americans. A 2004 Prevention magazine survey found 65 million patients talked with a physician as a result of seeing an ad for a prescription medication. Almost 30 million spoke to a physician for the first time about a specific medical condition. Advertising of prescription medications has helped millions of Americans receive medical care for diseases that might otherwise have gone untreated or undiagnosed.
• “Where does one draw the line?” One United States Senator has asked. Would we also tax advertising for vehicles that do not meet emissions or fuel economy standards, advertising for gaming, or foods that do not meet some nutrition standard?
We have learned that Senator Bill Nelson, D-Fla. does not intend to offer an amendment to the healthcare reform legislation to eliminate deductibility for pharmaceutical advertising. He had previously stated his intention to do so in a letter to the St, Petersburg Times and in a constituent newsletter.
The Senator has not disclosed reasons for his change of heart, but it is our belief that the strong response from the ad industry played a role in this decision.
Once again, deductibility seems to be off the table. However, it can easily and quickly return as we have seen before. We will continue to keep a close watch on lawmakers and keep you informed of any developments.
Thank you for your immediate and effective response. As always, do not hesitate to contact me if you have any questions.
Ronald Reagan once said, the scariest words people will ever hear are, “I’m with the government and I’m hear to help”. Next week Congress is back at it after their Summer recess and embarrassing Town Hall meetings.
Health Care “reform” (the focus-group way of saying ‘government takeover of health care’) will be the big story. But there are several other debates going on over a variety of very important laws that could effect the advertising industry.
When the Feds get back, on the table will be:
Appropriations: Arguably, Congress’ most important task is making sure the government has enough money to keep running. Lawmakers will spend the next weeks scrambling to pass appropriations bills for fiscal year 2010, but there’s no way they’ll everything done by Sept. 30, the end of FY2009. Aside from health care reform, this will be Congress’ main task between now and December, as the Senate has only approved four of the 12 appropriations bills.
Defense spending: Perhaps the most contentious of the spending bills now in play. Before leaving in July, the House of Representatives passed a $636 billion defense spending bill, cutting additional funding for some programs, like the F-22 fighter jet, made by Lockheed Martin and Boeing. But the Senate hasn’t acted yet, and President Obama vowed to veto any defense bill loaded with pork. With jobs on the line and a midterm election ahead, expect a showdown. Let’s hope he means it.
Debt limit: In a letter to Senate Majority Leader Harry Reid, D-Nev., earlier this month, Treasury Secretary Tim Geithner said it is “critically important that Congress act” to raise the government’s $12.1 trillion statutory debt limit “as soon as possible.” Geithner didn’t suggest a new level, but he said Uncle Sam could be maxed out by mid-October. Lawmakers will act quickly, with much grumbling from Republicans and conservative Democrats. It could also affect spending bills. This is ridiculous as he wants to raise an already record debt ceiling, they need to make cuts.
Union membership: Since the beginning of the year, the Employee Free Choice Act, which would make it easier for workers to join unions, has been the lobbying focus for organized labor. They’ve met a formidable wall of opposition, led by the U.S. Chamber of Commerce. A compromise may be in the works, and you’ll undoubtedly keep hearing about the debate, but for now, Congress has bigger issues to tackle.
This one could have one of the biggest effects on our industry as it could cripple small businesses.
Telecom: Many telecom issues have been pushed aside to make way for health care and other pending Democratic priorities, but some things are likely to pass. Among them: a bill that allows digital broadcast satellite providers to continue to import network signals to rural areas. If lawmakers don’t act, providers lose this ability as of Dec. 31. Mostly likely Congress will take action. That’s good news for providers like DirecTV and DISH.
Executive compensation: Technically, it’s part of financial regulatory reform. But executive compensation has been a hot issue ever since Congress ponied up $700 billion in bailout funds for the financial sector last year. In June, the House approved a bill to give shareholders a “say on pay” for executives. It also requires the biggest financial companies to disclose their incentive-based compensation practices. The Senate is expected to take up the bill this fall. Another area where Government has no business meddling.
Estate tax: President Obama wants to see a permanent extension of the estate tax, but that’s unlikely to happen this year. Instead, look for Congress to give it a one-year extension, as it’s slated to expire for a year in 2010. For 2009, estates valued at less than $3.5 million are exempted from the tax, which has a maximum rate of 45%. Continuing the sad legacy of progressive taxation. It’s unconstitutional.
It will be an interesting end to the year as we try to break free of this recession and the Obama administration tries to keep it going.
Making business harder to conduct in Florida and discouraging businesses away from relocating to Florida is bad for our industry. That is what will happen if Amendment 4, or Hometown Democracy, passes on the 2010 ballot.
If passed, this proposal would screw up the local planning process and discourage Florida communities from building schools, highways, hospitals, etc. It would not only make it tough for local businesses to grow, it would also discourage businesses from bringing new jobs to Florida. Small businesses owners already must navigate the tricky waters of Florida’s land-use process. The addition of Amendment 4 would also force them into costly political battles just to stay in business.
How do I know? Well we have a recent example that is illustrative of the disaster that looms with Amendment 4. In 06 St Pete Beach passed a local version of Amendment 4. Since then, many businesses have been forced to pay over $500,000 in fees with more problems approaching.
Not only are their business reasons not to pass Amendment 4, but there is that pesky “rule of law” argument. You see, we do not live in Democracy. We have laws that are meant to protect people and their property from the masses that might do them harm.
As a friend recently said, “The fundamental question is: Where does one individual obtain the authority to tell another individual what to do with their property or how to use it? If an individual does not have that authority then they can not delegate authority to the government that they do not have as an individual.”
As an industry we should fight Amendment 4 because it steps on private property rights and hurts small business.
Full Disclosure: I actually made a little bit of money off of a program that we sold at Cox Radio Jacksonville that was based on the Cash for Clunkers legislation.
Now that that’s out of the way let’s review the post-mortem of the “wildly successful” (according to White House minions) program that allowed consumers to trade in low mpg cars for higher mpg and receive a credit of $3500-$4500 towards the purchase of that new car. As with most Government programs that have good intentions- in this case it was to decrease carbon emissions and boost the automotive industry- the end result was typical. However, once again, unintended consequences will put the program squarely in the “failure” category.
It sold cars. In fact it sold so many cars that news out of Detroit says that both Ford and GM plan on increasing production the rest of the year to fill up empty lots that are barren because of the program.
It will have a minor impact on the environment.
It caused Automotive advertisers to spend again! Certainly worth it for someone in advertising and media where a huge portion of our income is based on automotive spending.
Taxpayers are paying for this. Taxpayers are actually paying for the destruction of useful property.
It puts a whole new mass of the population who were not in debt for a car payment in debt. How long will it take for a portion of them to run into payment problems? Another bubble folks.
Used car prices are spiking. Now cars that lower income consumers could afford are being destroyed.
Charities that use unneeded automobiles to auction for their money are losing critical funding.
The program simply delayed a worse 2010 in the automobile industry.
Car dealers are not getting paid. Like most government bureaucracies the response and demand was misjudged. Car dealers were backing out before the program was to end, another reason to never trust these kinds of programs.
I have conversations daily, at work, at lunch, at the gym, and inevitably I hear “I don’t get into politics”. The statistics seem to confirm this too when you consider only:
- 1% of Americans donate to a political campaign.
- 21% of Americans know who Robert Gates is.
- 15% of Americans can identify Harry Reid.
- 16% “stay up to date” on political news.
- and 36% of 18-34 year olds give “quite a lot of thought” to an election.
So do these stats confirm that most people simply are not involved in politics? To the contrary if you work, produce an income, and spend money you are DEEPLY involved in government and politics whether you choose to be or not.
In 2009 the average American will:
- work 13 days to pay for their Clothing.
- work 22 days to pay for their Recreation and Entertainment.
- work 31 days to pay for their Food.
- work 52 days to pay for their Medical needs.
- work 65 days to pay for their Housing.
- WORK 107 DAYS TO PAY TAXES TO FUND THE GOVERNMENT!
And that’s not to mention the taxes and fees you pay for what you purchase and other services. You would have a very hard time coming with aspects of your life where government is NOT involved. The toothpaste you used this morning, the days you can water your lawn, the radio station you listen to on the way to work, the headache medicine you take, even the items you can sell at a garage sale have some level of government regulation and this infringement is rapidly increasing.
If you are in the advertising industry and have not been involved you must know that 2009 and 2010 will be critical. Government revenues are down and politicians don’t get elected by cutting services. They will be searching for ways to raise revenue and we have to be ready it doesn’t come from our industry or our clients.
Sound like a tough assignment? It’s really not. You can get involved with little time commitment by taking these simple actions:
- Pay attention to this blog regularly. I will promptly update this at the first sign of pending legislation. There are links to Jacksonville City Council Members, the Florida State Government site, and the American Advertising Federation’s Government site.
- Contact your representatives and tell them how you feel. These are people just like me and you who will do what their constituents want. Make yourself heard. Politicians need to hear from you when they do something right too.
- Volunteer for a campaign. If there is someone out there running for office that shares your ideals join the campaign. You know more about advertising than they do. They could use your help and it will be fun!
Those of us in a Government role in the AAF will continue to work hard to communicate the issues to you and to effect policy in a positive way but we can’t do it without you. You ARE involved, just get more involved on your own terms.
Rusty Winter is the Government Relations Chair for AAF Jacksonville.
The special election to replace the deceased Jim King is just around the corner so it’s time to weigh in on which one of the candidates we can trust to not hinder the growth of the advertising industry. Since we in the advertising realm rely on strong economic growth and the promotion of business, we must back a candidate that will make it easier to conduct business in Florida, not harder and that will keep taxes low so consumers have an incentive to work hard and have more money to spend with our clients. Here is a look at the 4 major candidates for the District 8 seat along with my recommendation on who is best for us in the advertising world.
Thrasher is the ultimate political insider.
Thrasher is known more for back room deals and ethics violations than principled leadership. The late Mr. King certainly had challenges but for the most part was respected as a law maker. It’s hard to imagine an ethics-ignoring former lobbyist as the replacement for King.
According to Politics Florida, Thrasher “violated a state law prohibiting a legislator from lobbying a state board on behalf of a paying client. An Ethics Commission report found that Thrasher, a longtime general counsel for the Florida Medical Association, called the chairman of a Florida Board of Medicine subcommittee to lobby against a proposed rule and appeared in person a week later before to advocate for the FMA. The result was a public reprimand on the floor of the House”
“Thrasher was fined $500, a slap on the wrists considering the maximum fine proscribed for the infraction is $10,000. In the course of the ethics committee investigation, it was revealed that one of his appointees to the board refused to recuse herself and actively argued in favor of the low fine. Following the legally proscribed two year wait, Thrasher stepped right back into his lobbyist role, becoming one of the most powerful lobbyists in the state of Florida.”
“Thrasher purchased a small condo to become a resident of the district earlier this year, although he has not yet sold his former home.”
John Thrasher cares more about his own personal power than serving as a principled leader for Northeast Florida. Put a line through Thrashers name on your ballot.
Art Graham says he stands for lower taxes but as a Jacksonville City Councilman he voted for Mayor Peyton’s new fees TWICE. Mr. Graham talks a good game and if he actually did what he said might be a good choice. But we just can’t trust him in such a critical time. Strike through Graham.
Didn’t this guy JUST get re-elected to serve on the School Board after serving 8 years in the Florida House? Did he accomplish so much in that role over what amounts to less than a year?
Mr. Jordan served his country in the military for 39 years attaining the rank Colonel in the Army and like Dan Quiggle is a successful small businessman. I really like his directness and this quote about public schools is typical Mr. Jordan, “We need to teach people that going to public school is not a right, but a privilege, and if you are going to be disruptive the appropriate action needs to be taken. If we have safe schools and a positive learning environment, we can get and retain quality teachers.”
Stan Jordan seems like a decent choice but I just can’t get over the political opportunism that he is showing after the Senate seat came open and I think his focus is too limited to education. Reluctantly put a strike through Jordan.
Dan Quiggle has raised less money than his counterparts and is a newcomer to elected office although certainly not brand new to politics as he worked for former President Ronald Reagan in 1989. With no voting record to look at Quiggle is hard to judge on whether he would be an advocate of the advertising industry and the businesses that support it. But the good news is he is a successful businessman that has had to make the same sort of tough decisions that business owners (and families) are having to make in this recession and he seems to have the brightest economic mind of all the candidates. Although it’s anyone’s guess on what Mr. Quiggle’s voting record would have been he has an obvious and direct opinion on higher taxes and government spending, he doesn’t like either.
He served as State Chairman of Americans For Prosperity, a pro-growth organization and you don’t attain that position by hindering business.
If there’s two things we can count on Dan Quiggle for it’s keeping taxes low and less business regulation. As the Federal Government infringes on just about every aspect of our lives we need principled leadership at the state level to at least counterbalance that encroachment and keep Florida competitive.
For that we have a winner: Mr. Dan Quiggle.