GOP Considering Tax Increase on Advertising Costs?

The Republican Party has the image of being pro-business. Granted, it’s not hard to have that image when the opposition is the Democrats. However, the GOP is reportedly considering a tax increase that, if they go with it, should kill their street cred as the pro-business party.

From Lifezette:

As you read this, the “Big Six” are meeting to discuss which deductions to keep or eliminate, and Ways and Means Committee Chair Kevin Brady must quell these whispers of taxing advertising. Imposing such a levy would trample on our country’s liberty and values, setting a dangerous precedent for further constitutional breaches in the foreseeable future.

As substantial “pay-fors” such as the border adjustment tax begin to fall out of the public’s favor, some in Congress have begun to look at provisions from Dave Camp’s 2014 tax reform proposal as a blueprint for replacement. Camp’s proposal would have changed the tax treatment of advertising from a normal, 100 percent deductible business expense to one that is only 50 percent deductible, with the rest being amortized over the course of a decade.

Self-proclaimed liberty-loving conservatives who are prepared to advocate for such a provision need to reflect on American history — after all, what did we fight the American Revolution over?

Perhaps more importantly, doing this will be a complete disaster. As Kimberly Morin at The Federalist notes:

Why would anyone actually think this is a good idea? Advertising is used by businesses of all types, from the very smallest to the largest. It is a cost of doing business. It is not an asset to be amortized.

Businesses are already taxed on their revenues. Advertising simply draws people to purchase a business’ product or service or get customers into their places of business.

She’s right. This will put business owners in a tough spot. Do they reduce their advertising, or do they cut other expenses, like wages, to offset this new burden? It’s going to be one or the other.

If a business opts to reduce advertising, this will benefit older, more established firms over smaller, newer concerns. After all, you probably already know the plumber who has been in town for decades, but what about the new company that has lower rates and lower wait times for repairs?

However, that’s not the only outcome of reduced advertising. The companies that provide advertising are going to feel the pinch. Granted, this includes the progressive allies in print media and television, but it also will include billboards, radio, and even the United States Post Office.

The ramifications of reducing wages should be obvious. Having fewer employees or replacing veteran workers with lower-paid employees both have an overall effect on the economy, especially since I figure most businesses will go this route.

For a moribund economy, this is not good news. If the Republicans push a plan like this, it should forever kill their image as pro-business. At best, they should be labeled “not quite as awful as the other guys.”