Sacramento Legislators Put On Notice Over New Tax on Small Businesses

SACRAMENTO, Calif. (Aug. 14, 2024) — Leading the outcry over what they call “an enormous tax on digital advertising,” more than 150 small business owners today delivered Sacramento lawmakers a letter protesting Senate Bill 1327, which would impose a 7.25 percent tax on digital advertisements. Sponsored by Sen. Steven Glazer (D-Orinda), the bill was approved by the California State Senate on June 27 and is slated for debate — and possible approval — in the state assembly later this month. 

The letter’s signers said small and local businesses, many of whom purchase digital advertisements to help grow their businesses, will be severely impacted by the new tax. 

“Policymakers don’t seem to understand that it’s small businesses — and, ultimately, consumers — who will pay this tax,” said Alfred Mai, founder of ASM Games, based out of San Francisco. “More fundamentally, they don’t seem to understand that digital ads are absolutely essential to small businesses’ growth and success. If we run fewer digital ads, we’ll attract fewer customers. If we buy the same number of digital ads, we’ll have to pass the increased costs along to customers.” 

“It’s upsetting to hear politicians talking about all the things they want to pay for with the revenue from this new tax,” said Kerry Mellin, who runs EaZyHold, an online business based out of Greater Los Angeles that supports the disability community. “They utterly fail to consider how the new tax will affect small businesses and the communities they serve.”

“Lawmakers seem to think this tax will impact large tech companies like Google and Meta,” said Mellin. “In fact, it’s small players like me, who partner with the bigger companies for affordable, effective digital ads, that will really suffer. We have to stand up and make clear that this bill will hurt our families, employees and communities.” The letter and its signatories can be viewed online here. Some small business owners will meet with Sacramento lawmakers this week prior to the bill’s debate in the California State Assembly Committee on Revenue and Taxation, led by Chair Jacqui Irwin (D-Thousand Oaks) and Vice Chair Tri Ta (R-Westminster).