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Measure to tax social‑media ad revenue for youth mental‑health fund advances amid legal and industry pushback
Summary
A proposal to tax social‑media advertising revenues and put the proceeds into a trust for youth mental‑health, education and social services advanced from committee despite industry warnings about costs to advertisers and possible federal preemption.
Assemblymember Lowenthal introduced AB 796, the proposed California Social Media Accountability Act, which would levy a recovery fee on social‑media platforms’ in‑state advertising revenues and deposit proceeds into a dedicated Social Media Safety Trust Fund. The author said the fund would finance school‑based mental‑health services, research on social‑media harms, public education and social‑service remediation for harms such as sextortion or trafficking.
Supporters argued the fee would make platforms bear part of the public cost of youth mental‑health harms. Mark Bergman of the Organization for Social Media Safety testified that schools and services are strained and that platforms’ ad revenue should contribute to remediation. The author and supporters cited research linking extended social‑media use to depression, anxiety and eating disorders among adolescents.
Business, advertising and taxpayer groups opposed the proposal. The California Chamber of Commerce, a coalition of advertisers and trade organizations argued the fee is effectively a tax on digital advertising inputs that would be passed through to advertisers and consumers, could increase prices for small businesses and risk litigation under the federal Internet Tax Freedom Act (ITFA). Industry witnesses also raised administration and sourcing questions — how in‑state ad revenue would be measured and whether encrypted or cross‑border ad deliveries could be reliably sourced for taxation.
Committee members expressed a mix of support and caution. Several members supported the principle of making profitable platforms contribute to costs they impose on public services, while others emphasized legal and administrative concerns that will be reviewed if the bill reaches the Revenue and Taxation Committee.
The committee recorded a vote to send AB 796 to the Revenue and Taxation Committee; the roll call recorded seven ayes on the motion and left the item on call.
