The “Tax Cuts and Jobs Act,” introduced amid great fanfare on Nov. 2, has now been passed by the U.S. House of Representatives along an essentially party-line vote. The Senate’s version, introduced Nov. 9, is still undergoing intense scrutiny as groups from every quarter weigh the bill’s proposed cuts in tax rates versus the elimination of certain deductions, credits, and other tax breaks.
As ideas for reforming the tax code were tossed around in recent months and even years, one proposal – or some variation of it – would surface from time to time. This was the idea that the tax deduction for business advertising expenses should be eliminated.
This has always been an ill-considered idea (as we shall discuss below), and thus we were relieved that it did not find its way into the new tax bills of either the House or Senate. But since these bills are only the opening salvos in the difficult battle to revise the tax code, it would be worthwhile to examine why this ad-related provision should not be a part of the measure that finally reaches the president’s desk.