The Assembly voted 55-6 on June 1 to approve legislation that would establish an internet link tax in California (AB 886, Wicks).
The CalTax-opposed bill, described by its author and several supporters on the Assembly floor as a “work in progress,” would require internet platforms with 50 million or more monthly users or annual revenue exceeding $550 billion to pay a “journalism usage fee” to digital journalism providers.
The “fee” would be equal to an as-yet-unspecified percentage of the platform’s advertising revenue generated during the month – established in arbitration between online platforms and news providers – and the bill prohibits a covered entity from retaliating against journalism providers.
CalTax noted that the charge violates the Internet Tax Freedom Act as a discriminatory tax on electronic commerce.
“The Assembly approved a backdoor tax on the news that we receive online,” CalTax President Robert Gutierrez said. “This plan is illegal and violates taxpayer protections intended to keep the internet affordable. The bill now heads to the Senate, and we urge senators to reject AB 886.”
Assembly Member Buffy Wicks, a Democrat from Oakland, said the free press “is at risk right now” and her bill would provide financial resources that will be used to pay journalists “when the stakes could not be higher.”
Meta said this week that it will remove news content from its platform in California if AB 886 becomes law.
“If the Journalism Preservation Act passes, we will be forced to remove news from Facebook and Instagram,” Meta spokesperson Andy Stone wrote on Twitter. He described the proposal as a “slush fund” that “primarily benefits big, out-of-state media companies.”
Republican Assembly Member Bill Essayli, from Corona, said he is a co-author of the tax bill because “our free press marketplace is completely out of balance” and “big tech operators” have “misappropriated” journalists’ work.
Republican Assembly Member Heath Flora, of Manteca, opposed the bill because it would compel private-sector businesses to enter arbitration to determine an amount that one party would have to pay another.
“For us to allow private arbitration to redistribute funds from one business to another … is a bad precedent,” Flora said. “What industry is next?”
Assembly Member Josh Hoover, a Republican from Folsom, warned of unintended consequences and said the bill would create incentives for tech companies to suppress some news stories. He said the bill would benefit larger publishing companies that churn out news stories, not necessarily the small publishers heralded by proponents of the measure.
The bill now moves to the Senate, where it will be assigned to a policy committee.
The passage of AB 886 occurred during a busy week in the Legislature, with both houses meeting extensively as they approached today’s deadline for bills to clear their house of origin.