Today, the California Chamber of Commerce added SB 1327 (Glazer; D-Contra Costa) to its 2024 Job Killer List.
SB 1327 implements a discriminatory 7.25% tax on the revenue generated from the sale of digital advertising. The tax increase proposed in SB 1327 will be separate from and in addition to income taxes already paid from income generated from sales of digital advertising.
“This bill punitively targets only a handful of taxpayers that sell digital advertising, yet will financially cripple many, many small and medium-sized businesses,” said CalChamber Senior Policy Advocate Preston Young. “The brunt of this tax will ultimately be borne by smaller employers that rely on advertising to increase the reach of their business.”
Businesses of all sizes and consumers rely on the digital economy, including advertisements. Assessing such a tax will drive costs higher for Californians since the platforms paying the tax will build those costs into the products they offer in order to offset the new expense.
In addition to having the country’s highest personal income tax rate, California also has the highest sales tax rate and gas tax rate in the United States, as well as the sixth highest corporate tax rate–not to mention a housing affordability crisis.
Legislation like SB 1327 reinforces the perception that California is an arbitrary and difficult place in which to do business. SB 1327 will plausibly achieve the exact opposite of its intention by reducing tax receipts, rather than redistributing them.
