Talk of an Advertising Tax – 14 million jobs affected; McConnell commends House Committee; will the issue arise in the 2018 legislature?

The emails came Thursday, just minutes apart. Both concerned the same subject — a Congress committee developing a tax reform package. Same subject, maybe. But different approaches.

At 10:02 a.m. yesterday, the email from the Courier-Journal arrived. With assistance from the News Media Alliance, it took issue with the tax reform proposal including an advertising tax and how that will jeopardize businesses across the country.

Then at 10:04 a.m., the email message below from Sen. McConnell’s office arrived, praising the committee for providing a positive approach for middle class America.

Minutes later, yet another email came from the Courier-Journal reinforcing the negative effect of the Congressional plan on business.

So on one hand, you have the effects on business and the potential that 14 million jobs could be affected. The other taking the positive approach for the middle class. But then you have to ask yourself:

“How many of those 14 million jobs that would be affected by an advertising tax are held by members of the middle class?”

I’m betting a huge majority of jobs held by the middle class would be affected if the advertising tax proposal is kept in the proposal.

In the Courier-Journal story below, you will note the word may in bold. Late Thursday afternoon, the Courier-Journal sent emails that clarified language from the News Media Alliance earlier that day. The original article did not include the word “may” and NMA did not want to mislead readers.


Courier-Journal jumps on the bandwagon to help businesses by avoiding a possible  tax on advertising


Every $1 million spent on advertising supports 67 American jobs. With advertisers spending $206 billion in 2017, implementing an advertising tax will slash the livelihoods of potentially 14 million Americans working in small businesses in our communities.

The House of Ways & Means Committee just released tax reform legislations that may limit the business deductions of advertising expenses to offset costs of lowering the corporate tax rate. Advertising is a very necessary expense for millions of businesses, and no different than other expenses such as rent or office supplies. Help preserve the businesses in our towns and cities by writing to your Member of Congress, and opposing the Advertising Tax.

Here’s how to contact your Member of Congress:
For more information, visit the Advertising Coalition:


Meanwhile over at the Capitol, McConnell commends committee for providing step toward middle class relief

WASHINGTON, D.C. – Senate Majority Leader Mitch McConnell (R-KY) made the following remarks on the Senate floor regarding congressional tax reform efforts:

“Today, Chairman Hatch will lay out his legislative proposal for tax reform. It’s the product of a lot of hard work, dozens of hearings and member input, and I look forward to its release later today. The release of this plan is another critical step toward providing relief to the middle class. Once it’s unveiled, the proposal will go through regular order in the Committee. Senators on both sides will have the opportunity to offer amendments, and work together to help hardworking families in our country.

“This is our once-in-a-generation opportunity to lower taxes and shift the economy into high gear. In fact, tax reform represents the single most important thing we can do to spur growth and help American families. With this tax reform plan, the American people will know that relief is on the way. For you and your family, we want to make taxes lower, simpler, and fairer. For small businesses, we want to make it easier to navigate the tax code, grow, and hire workers. And for all businesses, we want to make it an easy decision for them to bring investment and jobs home and keep them here.

“As the Finance Committee continues its work on tax reform, both Republicans and Democrats will have the chance to offer their own ideas to make the bill better. I certainly hope they take it. This process isn’t behind closed doors. It’s out in the open for everyone to see and for everyone to take part. The House Ways and Means Committee is expected to finish their work on their legislative proposal soon. Under Chairman Brady’s leadership, they put in a lot of good work.

“I look forward to continuing to work with colleagues in both the House and the Senate along with President Trump and his team on our mutual tax reform goals. And our main goal is this: we want to take more money out of Washington’s pockets and put more money in the pockets of the middle class.

“In addition to the great work being done by Chairman Hatch in the Finance Committee, the Senate Energy and Natural Resources Committee under the leadership of Chairman Murkowski is taking important steps as well. The recent budget resolution gave the Committee instructions to generate a billion dollars of new revenue for the federal government. The Committee has now unveiled legislation to do just that by further developing the oil and gas potential in Alaska in an environmentally responsible way. Their good efforts can produce important benefits to both the people of Alaska and to our entire country.

“I would like to commend Chairman Murkowski for her efforts to support our nation’s energy security. This plan is a limited, responsible effort that can result in new jobs, a strong source of energy, and a boost to our economy – all while being responsible stewards of Alaska’s environment. I look forward to the Committee reporting this legislation next week. The Senate has many important items before it. Let’s work together to get them done, fulfilling our commitments to the American people.”


Thursday afternoon the Herald-Leader joined in with a lengthy story on a sales tax on advertising for Kentucky

It’s been discussed on the state level as long as an advertising tax has been thought about in D.C. The first was during Gov. Martha Layne Collins’ budget address in January, 1984. She wanted the legislature to explore the idea of taxing services. Thursday afternoon on a story by Herald-Leader reporter Daniel Desrochers focused on the billions of dollars available to Kentucky if a tax on services was to materialize.

It didn’t get a single discussion that year (1984) in the legislature.

Six years later, Gov. Wallace Wilkinson got more serious and proposed a sales tax on services. It at least garnered discussion in a House committee. All sorts of businesses that would be affected by it showed up to testify against the idea. KPA was among those, as well as advertising agencies, the broadcasters association and the cable TV association. Those groups testified against the sales tax on services proposed by Wilkinson because it included a tax on advertising.

Will it come up during the 2018 session? Perhaps but isn’t likely because there doesn’t seem to be much support for the idea on either side of the aisle.

However, KPA will continue to fight against the sales tax on advertising. And before you jump on the bandwagon that KPA should support the sales tax, here’s the one main reason.

Double taxation!

Our argument in 1990 on Wilkinson’s proposal focused on one major aspect. Newspapers are already taxed on subscriptions, paying the 6 percent sales tax on in-state subscriptions and single copy sales.

The ad tax would mean taxing what’s in the product.

So taxing the product plus what’s in the product is double taxation.

And we will always fight that regardless of how much the state needs the revenue.


Editor’s Note: I remember the House Committee meeting considering Wilkinson’s tax proposal. There was an unusually festive mood that day. The reason? The committee meeting was held the morning after UK defeated Shaquille O’Neal, Stanley Roberts and LSU at Rupp Arena 100-95. The Cats featured eight scholarship players and none taller than 6-foot-7. Even Cawood Ledford, testifying for the Kentucky Broadcasters Association against the sale tax showed signs of hoarseness during that committee meeting.


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