06.30.2009 03:00 PM
Lawmakers Mull Ending Tax Deductions for Drug Ads

WASHINGTON: Reports are emerging that members of Congress would like to yank the tax deduction for drug ads. The sector spent around $4.4 billion on advertising in 2008; nearly $1.7 billion of it on network television, according to figures from TNS Media Intelligence. Spot TV took $136.1 million. Though a similar bill went nowhere in 2007, the ad industry has mobilized, saying such a move would be unconstitutional.

“Denying the tax deduction for advertising in one industry is unprecedented and would raise very serious First Amendment concerns,” wrote Bob Liodice, president and CEO of the Association of National Advertisers in Ad Age. “The Supreme Court has made clear that differential taxes on the basis of the content of an ad are unconstitutional.”

All companies can now take an ordinary and necessary business tax deduction for advertising. Product-specific prohibitions set a “dangerous” precedent, Liodice said.

“Only companies that are presently popular with the government will feel confident about retaining their ad deduction, while businesses in ‘controversial’ categories will be highly jeopardized and in constant fear that their ad deductions will be revoked,” he wrote.

Drugs companies may not be alone, however. Medical Marketing & Media noted that Rahm Emmanuel, now the president’s chief of staff, suggested last fall when he was House Majority Leader that business might have to choose between tax deductions for advertising or research and development. More recently, Rep. Charles Rangel (D-N.Y.) chairman of the House Ways and Means Committee, said axing the deduction was “not off the table,” and pegged the potential revenue of doing so at $37 billion.

The tax deduction came up in discussions between lawmakers and drug lobbies in which the drug industry agreed to create $80 billion in cost savings on drugs sold in the United States, including coverage the Medicare gap. The issue is expected to be hashed out in health care reform over the next month.
-- Deborah D. McAdams 

Post New Comment
If you are already a member, or would like to receive email alerts as new comments are
made, please login or register.

Enter the code shown above:

(Note: If you cannot read the numbers in the above
image, reload the page to generate a new one.)

No Comments Found

Thursday 10:05 AM
NAB Requests Expedited Review of Spectrum Auction Lawsuit
“Broadcasters assigned to new channels following the auction could be forced to accept reductions in their coverage area and population served, with no practical remedy.” ~NAB

202 Communications /   Friday 12:41 PM
Albis Technologies Appoints New Head of Access Solutions
ignite strategic communications /   Thursday 03:48 PM
2015 HPA Tech Retreat(r) Unveils Expanded Session Schedule

Featured Articles
Discover TV Technology