Des Moines, IA, March 9, 2010 – Representatives of the advertising industry from across the state of Iowa met with over 30 legislators this morning over breakfast at the Iowa Statehouse to discuss issues facing the advertising industry.  This is the third year that the American Advertising Federation (AAF) clubs from around Iowa have banded together to meet with legislators.  Clubs supporting today’s effort included AAF Cedar Rapids – Iowa City, AAF Cedar Valley, AAF Des Moines and AAF Dubuque.  These clubs represent over 390 firms and 3,900 advertising professionals statewide.

 

Advertising Tax Deductibility:  Some  regulators have proposed eliminating or amortizing all or a portion of the business tax deduction for advertising.   The AAF maintains that reducing the deductibility of advertising expenses or eliminating them altogether artificially increases the cost of advertising.  Advertisers will compensate for the increased cost by reducing the amount of advertising they buy or by passing on additional costs to consumers. 

 

• Advertising is a legitimate and necessary business expense –not corporate welfare.  Similar expenses are wages, utility costs and rent. The Internal Revenue Code has permitted all of these costs, including advertising, to be deducted in the year they are incurred since the income tax was enacted in 1913.

• Advertising funds the media. Without it, newspapers and magazines would be unaffordable and free television, radio and internet sites would be nonexistent.

 

State Advertising Taxes:  Some states, when looking for new state revenue, have suggested expanding the existing sales tax to include many services exempt from taxation. Proponents claim that services are the fastest growing sector of the economy, yet they are not included in the sales tax.  Advertising is often one of the services targeted.  The AAF position is that placing a tax on advertising service and/or placement increases the cost of advertising or other  business- to- business services.  This will have a direct – and negative – impact on the advertising industry, economy, consumers and the state.

 

• Advertising is the engine that fuels the economy. Less advertising means fewer sales. Fewer sales mean reduced revenue and fewer jobs. Fewer sales also result in less sales tax revenue for the state.

 

• Without advertising, Americans would have to pay for all of their news, information and entertainment or it would have to be financed by the government. Studies show that advertising fosters competition and helps lower the price of products and services. Less advertising means less competition.

 

The AAF also showcased the public service projects that local advertising clubs are spearheading.  Projects include a television public service campaign to educate young people about “sexting” in the Cedar Rapids  - Iowa City area, a campaign to help promote live music in Des Moines, and helping The Multicultural Family Center in Dubuque with a fresh new identity.

 

 

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Jerry Hadenfeldt

Legislative Director, AAF of Des Moines

515-284-2780

 

Kathleen Riessen

President, AAF of Des Moines

515-979-4166