Digital ad tax plan prompts discussion as impacts remain unclear

"The Senate Revenue Committee heard testimony on Wednesday evening about a proposed 10% tax on total revenue from digital advertising, if that total exceeds $150 million. State Sen. Robert Peters, D-Chicago, filed Senate Bill 3353 earlier this year. "It is in this moment and this time, as we have conversations about this budget and the next one, for us to start holding the richest of the rich companies that are making money off of our personal data, in some level, accountable," Peters said."

"Ramiro Hernandez, vice president of public policy and strategy with the Illinois Chamber of Commerce, said the tax would not only affect big tech. "Senate Bill 3353 is a largely unworkable form of taxation that risks ultimately impacting numerous consumers in the state of Illinois," Hernandez told the committee. Gov. J.B. Pritzker said in his budget address on February 18 that a social media platform fee would generate $200 million a year to support public education."

"Megan Stokes, state policy director at the Computer & Communications Industry Association, said SB 3353 has an extreme tax cliff where a minimal increase in revenue could trigger millions of dollars in tax liability. "This creates an extraordinary sharp cliff effect that can discourage growth and create instability and might actively discourage investment and growth in Illinois," Stokes said. Stokes said the bill risks violating the Commerce Clause and the Federal Internet Freedom Act."

"Jeremy Rosen, senior strategist for policy at Workers Center for Racial Justice, said revenue outside of Illinois would not be taxed. "I think we're able to quite well and quite properly track what activity is occurring here in Illinois. We're going to be able to tax that, and we're not going to tax activity that occurs outside t"

A proposed Illinois bill would impose a 10% tax on total revenue from digital advertising when annual revenue exceeds $150 million. State Sen. Robert Peters said the tax would hold the largest companies accountable for profits tied to personal data. Opponents argued the tax would not be limited to big technology firms and could affect consumers across Illinois. They cited an “extreme tax cliff” where small revenue changes could trigger large tax liabilities, potentially discouraging growth and investment. Critics also raised concerns about possible violations of the Commerce Clause and the Federal Internet Freedom Act. Supporters said advertising activity outside Illinois would not be taxed and that in-state activity could be tracked for enforcement.

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