California’s Controversial Tax Measures: Impact on Tech Companies and Local Journalism

• California is considering two measures to tax tech companies to fund local journalism
• One measure is a data extraction mitigation fee modeled after Maryland’s digital advertising tax
• The other measure is the Journalism Preservation Act, which mirrors a Canadian law taxing links to media outlets
• Both bills cleared the California Senate with a supermajority vote
• SB 1327 would impose a 7.25 percent gross receipts tax on in-state digital advertising for companies with worldwide revenue of $2.5 billion or more
• The tax would be borne by businesses placing ads, with some cost passed on to consumers
• Digital ad taxes can lead to more content behind paid subscription walls and increase subscription prices
• The bill raises legal questions under the Commerce Clause of the US Constitution and conflicts with federal law

Source: taxfoundation.org

Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.

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