The California Chamber of Commerce is warning business owners — especially ones who rely on digital advertising — about a Job Killer that awaits action when the Legislature reconvenes on Aug. 5.

We’ve previously written about SB 1327 from Sen. Steven Glazer (D-Contra Costa), which would implement a discriminatory 7.25% tax on the revenue generated from the sale of digital advertising. As the CalChamber points out, the bill is likely unconstitutional and will lead to costly litigation taxpayers will ultimately fund.

This bill remains of several introduced aimed at tech giants such as Google and Meta. SB 1327 only applies to taxpayers with gross annual revenue exceeding $2.5 billion. But it will be the small business owners who rely on digital marketing who will pay the cost.

The tax increase proposed in SB 1327 will be separate from income taxes already paid on income generated from sales of digital advertising. Assessing this tax may drive costs higher for Californians since the platforms paying the tax will build those costs into the products they offer to offset the new expense.

“This bill punitively targets only a handful of taxpayers that sell digital advertising, yet will financially cripple many, many small and medium-sized businesses,” said CalChamber Senior Policy Advocate Preston Young. “The brunt of this tax will ultimately be borne by smaller employers that rely on advertising to increase the reach of their business.”

Maryland enacted the first digital advertising act in 2020, which has been the subject of litigation since its passage, according to the California Taxpayers Association.

Maryland’s elected comptroller at that time, the defendant in several of the suits concerning the digital advertising tax, has publicly stated he believes the state should no longer expend resources “to defend a law that was constitutionally questionable at the time of enactment.”

SB 1327 would be met with legal challenges similar to those being litigated in Maryland.