Gavin Christopher Newsom, governor of California, applause at the groundbreaking for the Liberty Canyon wildlife crossing, signaling the start of construction for the structure over Highway 101 at Agoura Hills on Friday, April 22, 2022. Wildlife Crossing 15
Sacramento, California – California lawmakers are pushing forward with bold legislation that could see the world’s biggest social media platforms taxed on digital advertising revenue generated from California users.
Assembly Bill 796, introduced by Democrat Assemblymember Josh Lowenthal, passed its first vote in the California Assembly’s Privacy and Consumer Protection Committee with a 7-2 majority this week. If passed into law, the bill would tax the annual gross receipts that platforms like Meta, Google, TikTok, and X (formerly Twitter) earn from targeted digital ads shown to Californians.
The bill, which would take effect in 2026 and run through 2031, does not yet specify the exact tax rate. However, given California’s status as the most populous state—and the home base for many of the targeted companies—the potential tax revenue is expected to be significant.
If the bill passes, tax proceeds will be funneled into a new fund supporting mental health and social services. The legislation outlines the creation of four dedicated accounts: the Education Account, Mental Health Care Account, Research and Development Account, and Social Services Account. According to Newsom, the state government will allocate the funds to these causes to address growing concerns around youth mental health and the societal impacts of social media.
“This is about holding tech companies financially accountable for their role in the mental health crisis, especially among children and teens,” lawmakers said in defense of the bill.
The proposal comes amid a wave of national scrutiny of social media platforms. Just this week, Florida’s attorney general filed a lawsuit against Snapchat, accusing the platform of exploiting “addictive” features that allegedly harm children.
However, critics of California’s proposed tax warn it could have serious economic repercussions. Tech giants have already begun moving operations out of the state, citing rising costs and increasing regulation. Companies like Meta and X have scaled back their California presence, and some fear the new tax could accelerate the exodus.
Governor Gavin Newsom, who has historically sought to strike a balance between regulating Big Tech and keeping business in the state, will face mounting pressure if the bill reaches his desk. Whether he signs it into law may depend on how lawmakers address concerns about job losses and economic fallout.
The bill now advances to the next stage in the legislative process.
