February 6, 2018
- Tax Bill Leaves Advertising Alone
- DTC Advertising Deductibility May be Threatened
- Ad Tax Introduced in Oklahoma
- FDA Issues Advertising Guidance
- FTC Releases Report on Native Advertising
- DAA Summit Announced
Tax Bill Leaves Advertising Alone
In December, Congressional Republicans were ultimately successful in passing comprehensive tax legislation
which was signed into law by President Trump. The law permanently
lowers the top corporate tax rate from 35% to 21%. Individual tax rates
are also lowered, although not as dramatically and on a temporary basis.
Most individual tax cuts will expire on December 31, 2025.
new law does not make any changes to the tax status of advertising,
meaning that advertising will continue to be fully deductible as a
normal and necessary business expense in the year in which it was
incurred. We know that during the writing of the new law limiting the
advertising deduction was considered as a way to offset some the revenue
lost from lowering tax rates. AAF worked very hard to educate lawmakers
about the economic importance of maintaining advertising as a fully
deductible business expense.
DTC Advertising Deductibility May be Threatened
overall advertising deductibility seems to be safe for the moment,
deductibility for direct-to-consumer advertising of pharmaceuticals may
still be vulnerable. A recent report
by the National Academies of Sciences included a finding that DTC
advertising costs should no longer be tax deductible. The Senate Health,
Education, Labor and Pensions Committee conducted a December hearing on the report.
deductibility recommendation was received sympathetically by some
Senators who acknowledged that the First Amendment would not allow
banning DTC advertising. Going unrecognized was the fact that the
proposal would still discriminate on the basis of content and thus still
violate the Amendment’s protection of commercial speech. Some Senators
and witnesses made the erroneous assumption that reducing or eliminating
advertising would lower the cost of medications. Also unacknowledged
was the benefits that advertising brings though consumer education and
the prompting of countless conversations between patients and their
his State of the Union address, President Trump promised to bring down
the cost of prescription medications. The administration has not
released any specifics on how it will propose to reduce the cost of
pharmaceuticals. AAF will closely scrutinize the proposal and subsequent
debate for any effort to unfairly target DTC advertising.
Ad Tax Introduced in Oklahoma
Oklahoma State Senator Nathan Dahm, R-Broken Arrow, has introduced legislation
that would impose a sales tax on many forms of advertising, including
newspapers, billboards and sports programs. It is unclear whether
broadcast and other forms of advertising are intended to be targeted.
AAF has been in touch with local AAF members and the Oklahoma Press
Association about the bill. At this point in time it is appears
unlikely that the bill will be brought to a hearing or vote, but we will
continue to closely monitor the situation.
FDA Issues Advertising Guidance
The U.S. Food and Drug Administration has issued Guidance on the use of Product Name Placement, Size, and Prominence in Promotional Labeling and Advertisements.
The FDA’s recommendations concern product names in traditional print
media advertising, like journal ads and brochures, as well as
promotional videos, broadcast and online ads.
FTC Releases Report on Native Advertising
In December, the Federal Trade Commission released a staff report entitled Blurred Lines: An Exploration of Consumers' Advertising Recognition in the Contexts of Search Engines and Native Advertising.
The report summarizes research that FTC staff conducted from 2014 to
2015 related to consumer recognition of paid search advertising and
native advertising on various online platforms. According to the report,
the FTC commissioned the research to further its mission to police
deceptive advertisements, including search and native advertisements
that require clear disclosures that consumers understand.
DAA Summit Announced
The AAF supported Digital Advertising Alliance has announced that its 2018 Summit theme is “ADapt!” The Summit will be held June 12-13 in Sonoma, CA. Registration
is open for this unique event that brings together all stakeholders for
effective self-regulation in relevant ad content and messaging based on
responsible data collection.
<< 2018 Reports | View all Government Reports >>
The AAF protects and promotes advertising at all levels of government through grassroots activities. Our nation-wide network monitors advertising-related legislation on local, state and federal levels. We put our members face-to-face with influential lawmakers while encouraging self-regulation as a preemptor to government intervention, when appropriate of course. To learn more about our advocacy efforts, click here.