Proposed tax reform provision could be harmful to businesses and economy

Dear Editor:
With chaos reigning in Washington over the debt ceiling, Obamacare and the healthcare.gov website, it's easy for other issues that may have a major impact on businesses (and thus the average citizen) to fall off the national radar screen. One such issue that is steadily gaining traction is a provision included in draft tax reform legislation that would affect businesses' ability to fully deduct advertising as a business-related expense.

In the House Ways and Means Committee, the chairman, U.S. Rep. Dave Camp, R-Mich., is working on a House bill that would reduce or amortize the advertising deduction over several years, while just recently U.S. Sen. Max Baucus, D-Mont., chairman of the Senate Finance Committee, released draft legislation that takes direct aim. This version would only allow 50% of advertising expenses to be deducted in the current year, with the remaining 50% amortized over five years.

On both sides, the initiative is actually part of broader legislation to reform the corporate tax code. That is particularly disturbing, for many businesses and people in general are in favor of reform. However, trying to pay for it with advertising dollars is counterintuitive and ironically anti-tax reform. Consider: