By Ron Paul
One thing is certain about the upcoming debate over tax reform — the end result will not be a win for the cause of limited government and individual liberty, unless some members of Congress change their tune. This is because too many remain obsessed with "revenue neutrality," the idea that any changes in the tax code must ensure the government will collect at least as much revenue from taxpayers as it does today. This obsession with ensuring the government not lose a penny of revenue leads politicians to insist that any tax cut be "offset" with tax increases.
The hunt for tax increases to "offset" tax cuts means that tax reform packages contain tax hikes that are very harmful to the economy, harmful to liberty and would never pass Congress as a stand-alone bill. For example, this year’s tax reform package may repeal and replace the advertising tax deduction, which allows businesses to fully expense their advertising costs. This is consistent with the First Amendment as well as the treatment of every other business expense, such as wages and research and development.
Under the proposal, businesses would only be able to deduct 50% of their advertising costs the year the costs are incurred. They would then have to write off the remaining costs over the next 10 years. Because of inflation and the time value of money, this change would severely reduce the deduction’s value, and thus reduce the amount of money spent on advertising.
An advertising tax is a tax on speech — on valuable information being served to consumers about goods and services.
The advertising tax will adversely affect businesses by limiting their ability to communicate with consumers. This will not affect large businesses, who either can afford the extra costs, are established enough that they can afford to cut back on advertising or both. The companies who will be hurt are smaller and newer businesses trying to reach consumers.
Read the rest at TIME