Internet Coalition Appeals to Governor Hochul Against Proposed Tax on Digital Advertising

In a significant move, Internet for Growth, a coalition representing small businesses, entrepreneurs, and digital creators, has sent an open letter to New York Governor Kathy Hochul. The intent? To voice strong opposition against Senate Bill S.173, known as the Digital Ad Tax Act. This proposed legislation seeks to place a tax on digital advertising revenue, which is intended to bolster state unemployment programs. However, the coalition warns that this tax could severely hinder the very businesses it aims to support, ultimately exacerbating unemployment issues rather than alleviating them.

Brendan Thomas, the Executive Director of Internet for Growth, aptly points out, "New York is the world’s advertising and media capital, yet this tax threatens one of its most vital industries." According to Thomas, digital advertising is essential for small enterprises, enabling them to reach customers and remain competitive. He argues that taxing this form of advertising would not just raise costs for businesses but also increase hiring expenses, making it more difficult for companies to grow their workforce.

Digital advertising provides a crucial avenue for small businesses that cannot afford traditional media outlets, which makes it imperative for their growth and sustainability. It allows companies to engage in targeted marketing without the hefty price tags often associated with TV, radio, or print. For instance, small businesses like Curtis Lumber and Macaluso Wealth Management, featured in the letter, illustrate how digital platforms help extend their outreach and customer engagement effectively, even in a competitive market.

The letter, which emphasizes the importance of digital ads in enhancing businesses and the creator economy, suggests that a digital ad tax would jeopardize the growth of digital influencers and content creators. New York City, known for attracting a significant investment in the ad-supported creator economy, stands to lose its competitive edge if the proposed tax is imposed. Thomas notes that NYC is one of three primary global hubs that draw two-thirds of investment in this sector, suggesting that a digital ad tax could suffocate this flourishing industry.

Beyond the immediate economic consequences, the coalition also highlights that the proposed tax could inadvertently increase the cost of living for New Yorkers. The tax burden would not only affect businesses but also trickle down to consumers, driving prices higher in an already inflation-prone economy. With the current unemployment rates above the national average, imposing such a tax would likely stifle job growth further rather than stimulate it.

New York has the highest tax burden in the United States, and businesses are already grappling with economic headwinds. Adding a digital ad tax adds another layer of complication that may lead some businesses to consider relocating to states with more favorable tax structures. In an age where government support is critical for small businesses, the coalition urges a reconsideration of tax measures that would further inhibit economic growth.

Instead of adding burdensome new taxes, Internet for Growth encourages the Governor and state legislators to consider innovative solutions that can promote economic recovery without stifling the growth potential that digital advertising offers.

In a closing note, the coalition expresses readiness to collaborate with the Governor’s office to seek solutions that can continue to drive innovation and prosperity in New York while protecting the interests of small businesses and creators.

As the debate around the Digital Ad Tax Act unfolds, the voices of those who stand to be affected – small businesses, digital entrepreneurs, and creators – are critical in shaping policies that can foster growth and support a vibrant economy in New York.