California lawmakers have moved forward with legislation that could see taxes applied to the largest social media platforms in the world.
A bill that would place a tax on the gross receipts that social media companies earn from digital advertisements targeting California users passed its first vote in the state legislature.
Newsweek contacted the author of the bill, Democrat Assemblymember Josh Lowenthal, for more information on the legislation via email.
Why It Matters
The proposal is one of the most ambitious state-level efforts to impose fiscal accountability on social media platforms for what lawmakers describe as their role in escalating mental health crises, especially among youth. It comes as other states, like Florida are also cracking down on social media companies, with lawsuits filed against Snapchat for "addictive" features.
California's uneasy relationship with its own tech giants—long a source of economic strength and political tension—frames the debate over the proposed social media ad tax. While the legislation aims to hold companies accountable for perceived harms to youth mental health, it also risks accelerating a trend of tech firms distancing themselves from the state.
Already, major companies like X (formerly Twitter) and Meta have shifted investments and operations out of California. Critics warn that imposing a new tax specifically targeting digital advertising revenue could further drive social media platforms to relocate jobs, offices, or operations elsewhere.
Governor Gavin Newsom, who has historically sought to balance tech regulation with business retention, will face a pivotal decision if the bill reaches his desk. Whether the proposal becomes law may hinge on how it addresses the potential economic consequences for California's dominant tech sector—and whether lawmakers can convince Newsom it will not accelerate the tech exodus.
What To Know
The bill passed a 7-2 vote in the state Assembly Privacy and Consumer Protection Committee, the first step to becoming law.
Under AB 796, companies such as Meta, Google, and TikTok would face a new state tax on revenue they earn from ads shown to California users.
The legislation, which was first introduced in February, reads: "This bill would, for taxable years beginning on or after January 1, 2026, and before January 1, 2031, impose a tax on a social media platform provider, as defined, equal to an unspecified percentage of the annual gross receipts derived from the purchase of advertisements for distribution on the provider's social media platform, as provided."
While a specific tax rate has not been set, California is the most populous state and is the home of many of the world's largest tech companies, meaning a huge amount of revenue could be gathered from the tax.
It comes after other lawmakers in other states are taking a more critical stance on social media companies.
This week, the Florida attorney general launched a lawsuit against Snapchat, accusing the company of using "addictive" techniques that were harmful to children.
What People Are Saying
The legislation said that it would raise money for Social Security and mental health support, with the bill reading: "The bill would establish various accounts within the fund and would allocate moneys into those accounts for expenditure according to specified purposes, including an Education Account, Mental Health Care Account, Research and Development Account, and Social Services Account.
"The bill would continuously appropriate the moneys in the fund to administer those provisions."
What Happens Next
The bill will go to the next stage of debate in the California state legislature. Governor Gavin Newsom will have final control over whether it becomes law.
