July 12, 2013

Chairmen Start With “Blank Slate” on Tax Reform

Senator Max Baucus, D-Mont. and Representative Dave Camp, R-Mich., who chair the Senate and House tax writing committees have informed their members that they want to start with a blank slate when considering tax reform.  Rather than looking at what expenditures and deductions should be eliminated from the tax code, they have asked other members of Congress to submit to them what expenditures and deductions should remain in the tax code.  According to a letter sent by Senators Baucus and Orin Hatch, R-Utah (the ranking Republican on the Finance Committee) “we plan to operate from an assumption that all special provisions are out unless there is clear evidence that they” (1) help grow the economy, (2) make the tax code fairer, or (3) effectively promote other important policy objectives.”
The deduction for the cost of advertising is not and never has been classified as a tax expenditure. In addition, the deduction for advertising costs certainly meets the first goal, makes market entry more fair for businesses of all sizes, and promotes efficiency in the economy.  AAF and The Advertising Coalition will be communicating this important message to the members of both the Senate Finance and House Ways and Means Committees as well as Congressional leadership and other key lawmakers.

Group Recommends Taxing Services

The Center on Budget and Policy Priorities, a Washington, DC based policy organization, has recommended states broaden their sales tax bases to including more services.  In a new report, Four Steps to Moving State Sales Taxes Into the 21st Century the service tax was the first of four recommendations made.  The others included requiring online retailers to collect sales taxes, taxing Internet downloads and closing the online hotel tax loophole.  No specific services are mentioned in the report, which seems to place a greater emphasis on personal services than business services.

Subcommittee Maintains IWG Language

The House Appropriations Subcommittee on Financial Services has approved the FY 2014 Financial Services and General Government appropriations bill that includes language preventing the publication of the 2011 report by the Interagency Working Group (IWG) setting forth “voluntary” nutrition standards to regulate the advertising of food products to children. According to the language in the bill, the report may be released only after the FTC and the other agencies in the IWG (USDA, FDA, CDC) submit the proposed recommendations for review by the Office of Information and Regulatory Affairs pursuant to Executive Order 13563.  The provision means the standards must undergo the same cost/benefit analysis as traditional government regulations.

SEC Lifts Advertising Ban

The U.S. Securities and Exchange Commission has voted to allow hedge funds and other private firms to raise money by advertising to the public.  The vote overturns a rule that had been in place since the 1930s and comes at the direction of Congress which directed the Commission to lift the ban as part of the bipartisan Jobs Act.  Critics contend that advertising may take advantage of unsophisticated investors.  However, only accredited investors with a certain net worth or income will be allowed to make a purchase.  The Commission has also tentatively approved a proposal that would require firms that solicit the public to disclose more information about themselves and notify the SEC in advance of a solicitation.