Govt Relations

Election Changes Legislative Landscape

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Republicans won a sweeping victory on Election Day winning control of the U.S. Senate, increasing their majority in the House of Representatives and raising the number of states with a Republican Governor by three to 31.

As of this writing, Republicans hold 52 Senate seats to 43 for the Democrats with two Independents.  Three races remain undecided.  Democratic incumbent Mark Warner looks likely to win in Virginia and Republican challenger Dan Sullivan in Alaska.  In Louisiana, there will be a December 6 runoff between incumbent Senator Mary Landrieu (D) and challenger Rep. Bill Cassidy (R).

Republicans may now control the Senate and its agenda, but Democrats still have significant power to influence and block action through use of the filibuster.  Sixty votes will be needed to pass any major piece of legislation since that is the number of votes needed to invoke “cloture,” the only process available to end a filibuster and force a vote on an issue.

In the House, some races are still undecided, but Republicans will have at least 243 members, which would be their largest number since at least 1928.

Memberships of the committees important for advertising will not be set for some time but many of the future leaders are already known.  Senator John Thune, R-S.D., will be the new chairman of the Senate Committee on Commerce, Science and Transportation.  On the House side Representative Fred Upton, R-Mich., will remain as chairman of the House Energy and Commerce Committee.  In a rare loss for Republicans, Representative Lee Terry, R-Neb., who chaired the subcommittee on Commerce, Manufacturing and Trade with jurisdiction over the Federal Trade Commissionand most advertising issues was defeated.

Possible Tax Reform In the New Congresss

In the immediate aftermath of the election Republican leaders and President Obama are pledging cooperation on a number of issues of mutual interest. One of the most prominent of these is tax reform.

As AAF members know, major corporate tax reformplans were introduced a year ago by the chairmen of the House and Senate tax writing committees.  Both of those proposals would have dramatically reduced the corporate tax rate while simultaneously eliminating many tax deductions and preferences.  In both plans only 50% of advertising expenses could be deducted in the first year.  The remaining amount would then be amortized over time – five years in the Senate version, ten years in the House.  The Joint Tax Committee estimates the House version would raise $169 billion over ten years.

The plans were bipartisan as the then-chairman of Senate Financewas Democrat Max Baucus of Montana and the chairman of House Ways and Meansis Republican Dave Camp of Michigan.  Senator Baucus left the Senate to become U.S. Ambassador to China and Representative Camp is retiring at the end of the Congressional session, so both Committees will have new leaders in the new session.

Senator Orrin Hatch, R-Utah, will chair the Senate Finance Committee.  Representatives Kevin Brady, R-Texas and Paul Ryan, R-Wis., are expected to compete to be the new chair of Ways and Means.

Fortuitously, representatives of the Utah advertising industry, including AAF-Utah, recently met with Senator Hatch to discuss the importance of maintaining full current year deductibility of advertising expenses.  Representative Ryan has talked about the need for tax reform to address both corporate and personal income taxes, so that may influence how the issue is addressed as well.

On a related note, The Center for American Progress, a liberal leaning public policy research and advocacy organization, has endorsedthe amortization of a portion of advertising costs over a period of time.  While not making a specific recommendation, the report specifically references Ways and Means Chairman Camp’s plan.  The Center’s report does acknowledge that the influx of revenue would be short-term since businesses would still eventually be able to deduct the full 100% of their advertising expenses.

AAF will continue to work with our nationwide grassroots network to educate lawmakers on the importance of maintaining the full current year business tax deduction for advertising expenses.

Possible Illinois Tax Threat

Not all the action will be in Washington, DC.  At least one new governor bears watching.  Early in his campaign Bruce Rauner (R), the governor-elect of Illinois released a plan to modernize the state sales tax by extending it to many services.  Potential taxable services listed included sales of advertising time and space on billboards, radio and TV, as well as advertising agencies.

AAF will work with our Illinois members to contact the Rauner administration to explain the importance of advertising to creating jobs and economic activity in the state.

FCC Continues to Safeguard Emergency Alert System

One year ago, the Federal Communications Commission issued an Enforcement Alert warning that “Any transmission, including broadcast, of the EAS Attention Signal or codes, or a simulation of them, under any circumstances other than a genuine alert or an authorized test of the EAS system violates federal law and undermines the important public safety protections the EAS provides.”

The Commission has begun to take actions against violators.  While AAF is not aware of any enforcement actions against advertisers, the Commission does consider broadcast advertising to be programmatic material subject to this warning.  AAF members should be aware of this Alert and take care not to be in violation.

 

Source: Government Report: November 11, 2014

Continuing Resolution Includes Food Marketing Language

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The Continuing Resolution introduced in the U.S. House of Representatives includes language prohibiting the Federal Trade Commission from moving ahead with implementation of the Interagency Working Group’s (IWG) proposed nutrition principles for food marketed to children without first conducting a cost-benefit analysis in accordance with a 2011 Executive Order prescribing regulatory courses of actions by federal agencies. The Continuing Resolution is the all-encompassing legislation the Congress must pass in order to keep the federal government running in the next fiscal year.

At the same time, Senator Tom Harkin, D-Iowa and Representative Rosa DeLauro, D-Conn. and many of their Democratic colleagues have written to the Federal Trade Commission asking for increased oversight of food and beverage companies to ensure that they are making progress on reducing unhealthy food marketing to children.

The letter was sent as the Robert Wood Johnson Foundation released a study that found that major food manufacturers have cut calories in their packaged products by more than 10 percent over five years, substantially beating an industry-led pledge to trim 1.5 trillion calories by 2015.

In 2009 the 16 companies in the Healthy Weight Commitment Foundation promised to cut 1.5 trillion calories from its products, compared to a 2007 baseline. But the study, authored by researchers from the University of North Carolina at Chapel Hill, found that the companies removed 6.4 trillion calories by 2012, more than quadrupling the pledged amount.


This article is from the September 19, 2014 AAF Government Report by Clark Rector Jr, Executive Vice President – Government Affairs.

The AAF Government Report is available to all members of the AAF. If you are interested in receiving an e-mailed copy, please e-mail government@aaf.org.

If you are interested in receiving AAF SmartBrief, an opt-in news service, please visit www.smartbrief.com/aaf. AAF SmartBrief condenses advertising industry news from dozens of media sources into a succinct, easy to read e-mail.

View the full report on the AAF Membership site (you will need a login to view)

Digital Advertising Alliance Releases Mobile Guidance

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The Digital Advertising Alliance (DAA) has released new a new Mobile Guidance for applying its Self-Regulatory Principles currently enforced on the web to mobile environments, in order to provide consumers with easily accessed privacy controls in this increasingly used medium. The DAA administers the AdChoices icon and the self-regulatory program for online behavioral advertising. AAF is a participating association of the DAA and sits on its board of directors.

The DAA Mobile Guidance advises advertisers, agencies, media, and technology companies how to provide consumers the ability to see and exercise control over the use of cross-app, personal directory, and precise location data in mobile apps. This enforceable guidance reflects the reality that companies and brands engage with their customers on a variety of platforms, including mobile, and explains how the DAA’s program applies consistently across channels to certain data practices that may occur on mobile or other devices. A key provided benefit is enhanced consumer transparency for the collection of data across different mobile apps.

The guidance builds on the 2010 Self-Regulatory Principles for Online Behavioral Advertising and its 2012 Principles for Multi-site Data, which are the basis for the digital ad industry’s successful Advertising Option Icon initiative. This self-regulatory program – the largest and most comprehensive in the interactive advertising industry – is responsible for the ubiquitous Advertising Option Icon that is served on trillions of advertising impressions a year, signaling to consumers that various forms of online data are being collected and used to deliver them advertising tailored to their interests, and offering them a centralized system to opt out of the use of that data.

The DAA consumer notice and choice program has been praised by the Obama Administration, the Commerce Department and the Federal Trade Commission. The DAA’s mobile guidance released today aims to offer businesses policies and consumers assurances that the same notice and control consumers have in desktop Internet advertising environments will apply in the more complex, evolving world of the mobile Internet.

“The advertising industry has long had the gold standard for industry self-regulation,” said AAF President James Edmund Datri. “This move into the mobile environment demonstrates our commitment, once again, to consumer trust and protection. Technologies and communications methods may change, but our promise to treat our customers in a fair and ethical way never will.”

AAF Alert – Tax Reform

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AAF Club Leaders,
As you probably know, Congress may be taking up major tax reform later this year. Senate Finance Committee Chair Max Baucus, D-Mont., and House Ways and Means Chair Dave Camp, R-Mich., have said they plan to start reform from a “blank slate” and that all deductions, preferences and expenditures must be justified to be maintained.

Chairman Baucus and ranking Republican Orrin Hatch, R-Utah, have written a letter to members of the Senate asking for input on which deduction, preferences and expenditures meet the test of growing the economy, making the tax code fairer, and/or effectively promoting important policy objectives and should be maintained.

We believe that the business tax deduction for advertising expenses easily meets this test. It is important that Senators Baucus and Hatch hear from other Senators urging them to maintain the full advertising deduction.

Please contact each of your Senators on behalf of your advertising club as soon as possible and ask that he/she send this letter explaining the importance of maintaining the full advertising tax deduction to Senators Baucus and Hatch.

Please let me know if you receive any response to the request. Do not hesitate to contact me if you have any questions.
Clark Rector
Executive Vice President-Government Affairs
American Advertising Federation
crector@aaf.org
Follow me on Twitter @ClarkRector1
202-898-0089
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NC AAF Clubs to Meet with State Legislature

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The combined AAF chapters of Raleigh, Charlotte and Greensboro/Winston Salem are participating in an event to engage with state legislators.

The event will kickoff 7 pm Monday, April 30th (with “unofficial” cocktails beginning at 6 pm) at with a dinner featuring Speaker, Mark Prak with Brooks Pierce, counsel to NC Association of Broadcasters. (If you’d like to attend, please call one of the numbers below for location information.)

Tuesday morning, Speaker of the House, Representative Thom Tillis (R-Mecklenburg) will join everyone for breakfast at 8:45am in the 13th Floor Conference Room of the Wells Fargo Building.

After breakfast, the group will call on legislators from 9:30am – 1pm.

If you have questions about this event or would like to attend, contact:
Kip Krady – Charlotte – 704-714-9444
Harris Vaughn – 919-616-5791
Frank Manson – 919-414-4717

Deadline Drawing Near for Proposed SC Sales Tax Exemption Law

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The deadline is drawing near for a watered down bill in the SC House Ways and Means Committee that would eliminate many of the state’s sales tax exemptions. A few of these that affect the advertising industry are postage for mail marketing, audio video masters, and mail advertising from chambers of commerce.

Click here for a more complete list of exemptions.

For more on the news article please click here.

Maryland Bills Could Tax Some Advertising Services

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Two bills have been introduced in the Maryland legislature that could potentially tax some advertising services.

HB 1051 would extend the states sales tax to include direct mail advertising services, commercial photography and art services, public relations and other business consulting services.

SB 152 is Governor Martin O’Malley’s proposed budget and includes a tax on products digitally downloaded. According to the governor’s staff, the intent of the proposal is to tax consumer products such as music, books, software and games delivered electronically. However, the language of the bill is written very broadly and could be interpreted to include business to business transactions such as work product digitally delivered by ad agencies to clients.

Representatives of AAF and AAF-Baltimore were in Annapolis on Feb. 14 to visit with lawmakers and explain how the bills could cost Maryland jobs by putting advertising agencies in the state at a competitive
disadvantage relative of out of state agencies.

Currently we are hearing reports of this possibly happening in South Carolina and there is a statute in North Carolina as well.

Groups Make Proposal to ICANN

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AAF, many of its corporate members, local advertising federations and a
large group of other businesses and associations, have written a letter
to the Internet Corporation for Assigned Names and Numbers (ICANN)
proposing a way forward as ICANN begins to accept applications for new
top level domains (TLDs). The letter proposes a potential solution that
will allow ICANN to move ahead with the creation of new TLDs while
affording protections for brand and copyright owners.

Under the proposal:all NGOs, IGOs and commercial stakeholders concerned about protecting
their brands should be given the opportunity to have those brands
registered, without cost, on a temporary “Do Not Sell” list to be
maintained by ICANN during the first application round (any interested
party which does not want to have its brands on the Do Not Sell list and
would rather apply for a TLD would be free to do so). We will assemble a
team from the interested constituencies to work with ICANN leadership
during the first application round. If this group achieves consensus
with respect to any proposals, those proposals will be voted on by the
Board. At the end of the first application round, should the parties
continue to disagree, all parties will be free to pursue their legal and
equitable rights without prejudice.

AAF believes this reasonable proposal affords a solution that will
protect the interests of all concerned. We hope to receive a positive
response from ICANN in the very near future.

Most Clubs in the 3rd District have signed on to this letter.

© AAF District 3