Ad groups blast McCain's tax plan

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Five years after ad groups helped to kill a proposal circulating at the White House that would have eliminated the immediate deductibility of advertising expenses, GOP presidential hopeful Sen. John McCain (R., Ariz.) unveiled a tax plan that could put it back on the Beltway radar screen.

PART OF 43-POINT PACKAGE

In a speech in New Hampshire, he suggested a switch to amortization of ad expenses over several years as part of a 43-point package of needed tax equity reforms to "eliminate the numerous inequitable and unnecessary corporate . . . loopholes, subsidies and set-asides that make the tax code a 44,000-page catalog of favors for special interests."

Another item on the list: elimination of immediate deduction of magazine subscription drives. That proposal said publishers should "depreciate" rather than deduct the cost of increasing their circulations.

Aides said Sen. McCain, who chairs the Senate Commerce Committee, didn't have a specific proposal for the number of years over which the deduction should be taken or expected savings from each.

"The senator has tried to be intellectually honest and not pick favorites," a campaign aide said.

The proposal quickly riled ad groups, even if it came out of New Hampshire rather than Washington.

'COST OF DOING BUSINESS'

"I'm appalled [the proposal] would include [ad deductibility] as part of a special-interest tax loophole," said Hal Shoup, exec VP of the American Association of Advertising Agencies. "One would hope they would see a great difference between a tax loophole that favors one company as opposed to one that affects American business. Advertising is a cost of doing business."

Dan Jaffe, exec VP of the Association of National Advertisers, said Sen. McCain's committee chairmanship raises the profile of the issue, no matter what happens to his presidential campaign.

American Advertising Federation Senior VP Jeff Perlman said he had hoped Sen. McCain's interests would be favoritism or special interests, "not the economic engine that pushes the economy.'

He added that advertising has been accepted as an ordinary and necessary expense since 1913.

Copyright January 2000, Crain Communications Inc.

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