Advertising Tax Changes Included In House Tax Reform Proposal
February 27, 2014 at 4:19 AM (PT)
The federal tax plan proposal unveiled WEDNESDAY (2/27) by House Ways and Means Committee Chairman DAVE CAMP (R-MI) includes the cut in the advertising tax deduction feared by media and agency interests, slashing the deduction in half in the first year and leaving the remainder to be amortized over a 10-year period.
An exception would be to allow companies to take the first $1 million of advertising in a year as an expense as long as the total budget remains under $2 million.
The cuts in deductions are accompanied by a lowering of tax rates, with individual rates limited to two brackets, 15% and 25%, and corporate taxes cut from 35% to 25% over a five year period. Other controversial provisions would cap the mortgage interest deduction to $500,000 of debt (a move disproportionately affecting high-housing-price states like CALIFORNIA and NEW YORK) and eliminate deductions for state and local tax payments.
The plan is not expected to become law, since it is likely to encounter fierce opposition if it ever reaches the Democrat-controlled Senate and would face a likely veto by President OBAMA if it managed to survive the Senate. The last nail in the coffin, at least for this session of Congress, was Republican House leader JOHN BOEHNER's comments indicating that he won't even bring up the bill for a vote in the House.