Cut, Cut, Cut and Our Industry Was Gone
Unlike the piece of garbage sitting in the White House (or probably more like sitting on his fat-@$$ at Mar a Largo), I need a fact checker! As a caveat, this piece is opinion and conjecture. I write this more as a question and worry - I may have gotten it all wrong - and, other than being a very angry American and a small business owner, I have no expertise whatsoever on this subject. I’m not an accountant or a politician, I’m a former actor turned television commercial producer - but that’s my point! I’ve been researching and trying to comprehend what’s going on and I still can’t figure it out - what are the rest of the small business owners doing to understand all of this? I’m confused and extremely afraid and I urge anyone who might own or who might even work at a production company in the States to get scared and start researching.
As of right now, there is expected to be a vote either happening at this moment in America (I write this from London at ten minutes to midnight on Thursday night) or tomorrow (Friday). The President (ugh - might be the first time I’ve referred to him as that), has tweeted; "This week, the Senate can join the House & take a strong stand for the Middle Class families who are the backbone of America. Together, we will give the American people a big, beautiful Christmas present-a massive tax cut that lets Americans keep more of their HARD-EARNED MONEY!"
There are SO many horrible aspects of this tax bill for poor and middle-class Americans - including, but not limited to, 13 million Americans losing their healthcare. I know it’s hard for Brits to fathom this because even as much as they complain about the NHS being slow or clunky, they know (because they are smart) that no person suffering from cancer should have their healthcare taken away mid-treatment. The Republicans are so gung-ho to kill poor Americans that today flip-flopping war-hero Senator John McCain (who is currently undergoing treatment for cancer) said he would vote yes on this current tax bill. (Remember this is the man who brought us Sarah Palin and the Tea Party - or the original Alt-Right as I like to call them - when he ran against Obama in 2008.) But, at the end of the day, money matters to them more than human life. An analysis by the non-partisan Congressional Budget Office found that the Republican tax plan would hurt Americans earning less than $30,000 per year while rewarding high-earning business owners and individuals. A report by the joint committee on taxation similarly found that the rich benefit the most from the plan.
And so, I am very afraid for many reasons and for many people. But what does this have to do with us, the upper middle-class ‘creatives’ of the advertising industry in our own little bubble (and it can be a really nice little bubble) - and especially those of us in London? Well, it’s that small business thing and the advertising thing. And, according to the IRS and SBA, a small business could be anywhere from two employees to 500 employees, or have sales from $7 million to $35 million. I guess I’m one of the 97.9% of those businesses with fewer than 20 employees hoping someday I can be a ‘small business’ according to the IRS and SBA.
Here goes my attempt at deciphering this cacophony of fast-changing, fake news-saturated, convoluted and purposefully complicated bill as it affects us (in this particular way...). Although it’s very confusing, it seems to me that the Tax Bill coming from the House is proposing that we are no longer going to be able to take deductions that make it possible to receive a budget for a commercial from an agency or client and spend the necessary money for a shoot and then claim all of those expenses back so as not to be taxed on the full amount. If you know the answer to this and I’m wrong, please pray tell. Or see if you can come to your own conclusions:
According to The New York Times on the 17th: “Those who are actively running a business that is structured as a pass-through - for instance, a limited liability company, an S corporation or a partnership - will not see as great a reduction in taxes and may even see an increase in certain states."
“It’s not how much you make,” said Edward Reitmeyer, partner at Marcum, a national accounting firm. “It’s how you make it.”
In other words, the House bill may seem like a tax cut for small businesses, but it is not likely to bring much relief to many of those owners, and it is certainly not comparable to what was proposed for large corporations. And some professions, like consultants, lawyers, doctors and other professional services companies, are not even eligible for the lower pass-through rate.”
And from an accountant guy who owns a small business and works for small businesses and seems pretty pissed off (and he did the math, as he says over and over again!):
“Provision: Entertainment expense
House Bill: Completely repealed: Not good. Business flourishes with constructive meetings between business owners, vendors, customers and employees.
Provision: Business tax credits: Employer-provided child care, rehabilitation credit, work opportunity tax credit, new markets tax credit, building access for disabled individuals, employee tips and various energy credits.
House Bill: The House bill repeals a long list of business tax credits that help motivate wise investment and business development.”
Variety’s spin on it a couple of days ago seems very positive for the entertainment industry who have been lobbying for tax reform to lower corporate tax for the big studios and huge moneymakers*.
However, and perhaps the most potentially harmful to us, the last point in the article touches slightly on the fact that businesses will no longer be able to expense/write-off advertising costs. Sounds to me like a big old double blow for us - not only is advertising on the big list of deductible expenses we can no longer deduct, it seems to be on that list for everyone. Oh yeah... that means clients are going to have to think twice about whether advertising is worth it and, if so, I can bet those budgets will be slashed even more than they already are. Merry F-ing Christmas, Donald Trump.
If you’re worried, there is still time to call your Senators. Especially Jeff, “please don’t” Flake of Arizona @ 202-224-4521 and Senator Susan Collins of Maine @ 207-493-7873. Or just tell them all what you think - the general switchboard is 202-224-3121.
Amanda Jones is EP at Mad Ruffian