Counterpoint: Proposed tax on social media platforms would hurt small businesses

"In 2001, after I was laid off from my corporate job, my wife and I started a business selling custom-embroidered hats and shirts to local businesses. Equipped with a single embroidery machine, a bulky desktop computer and a lot of determination, we launched the business from our basement. Five years later, we shifted to an e-commerce model - and today, we operate from a state-of-the-art facility just outside Minneapolis. From there, our 28 employees annually ship hundreds of thousands of logo-embroidered items - ranging from sweatshirts and ball caps to aprons and tote bags - to businesses and organizations nationwide."

"But like many online-only retailers, our success ultimately depends on affordable digital ads that allow us to tell the right audience about our products. So it's worrying that Minnesota lawmakers are considering two bills, SF 5052 and SF 4787 (and companion bill HF 4343), that would drive up the cost of digital advertisements - making it harder for us to grow, compete with bigger companies, and succeed."

"The first bill, SF 5052, aims to strike a blow at big social media companies, but it would end up hurting Minnesota small businesses. SF 5052 would tax social media companies based on the number of Minnesota users whose data they collect. The problem is, the social media companies would simply pass along the cost of the new tax to small businesses like mine that advertise on their platforms."

"That would leave us with three bad options: We could absorb the cost of the new tax, eroding our margins; purchase fewer ads, hurting our growth; or raise our prices, slowing our sales among our increasingly cost-conscious clientele. Any way you slice it, Minnesota small businesses would take the hit."

A custom embroidery business started in 2001 with one machine and a basement setup, then shifted to e-commerce after five years. The company now operates near Minneapolis with 28 employees shipping hundreds of thousands of logo-embroidered items nationwide. Growth depends on affordable digital advertising to reach the right customers. Proposed Minnesota bills SF 5052 and SF 4787 would increase the cost of digital ads. SF 5052 would tax social media companies based on Minnesota user data, and those costs would likely be passed to advertisers. SF 4787 would tax digital ads and related services such as ad design and consulting, increasing expenses for small businesses and making competition harder.

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