Baucus’ Reported Ambassador Nom Leaves Tax Reform in Limbo

Marketers still worried about limiting ad-tax deduction in the House

With President Obama expected to nominate Sen. Max Baucus (D-Mont.) as the next U.S. Ambassador to China, tax reform and the proposal to limit the ad-tax deduction may have been dealt a setback.

Politico first reported Baucus’ impending nomination

The driving force in the Senate behind tax reform, Baucus, chairman of the Finance Committee, leaves no champion to take his place. It will be up to the next chairman—odds favor Sen. Ron Wyden (D-Ore.)—to determine how to proceed. A committee staffer suggested that any new chairman would likely want to start the process from scratch.

"The odds of getting tax reform done are pretty high right now," Sen. Orrin Hatch (R-Utah) told The Hill. "I don't think Senate Democrats want it, and I'm not so sure the people in the House want to go through that right now." 

Still, it's not over until it's over, and there's still the House to worry about.

"That may take some of the wind out of the sails on that idea in the Senate," said Dick O'Brien, evp of the 4A's. "Unfortunately, the momentum behind the reduction of the ad deductibility in the House moves on uninterrupted. So the industry will have to remain on full alert."

Rep. Dave Camp (R-Mich.), chairman of the House Ways and Means Committee, has proposed cutting the ad-tax deduction in half in the first year, with the rest amortized over 10 years—compared to Baucus' plan, which called for a five-year amortization. Originally, Camp wanted to move his tax-reform proposal through committee this year, but that has been put off until early next year.

"I've seen no indication that Camp has lost interest," said Dan Jaffe, evp of the Association of National Advertisers. "If the ad community does what it should do, this is an opportunity to re-educate Congress on the value of advertising and gain share of mind."