Lawmakers could tax social media companies to fund local journalism

OLYMPIA – State lawmakers are considering throwing the news industry a lifesaver by taxing some of the world’s biggest tech platforms.

If adopted, the legislation would impose a surcharge on large search engines and social media companies with a gross income of $5 million or more, with the tax capped at $6 million a year. The Office of Financial Management estimates the tax would raise $27 million in fiscal year 2027 and an additional $102 million between 2027 and 2031.

The proposal comes as the journalism industry across the country struggles to remain relevant and profitable in an increasingly digital landscape.

According to data compiled by the Local News Initiative at the Medill School of Journalism at Northwestern University, more than 3,200 newspapers have gone out of business since 2005, with more than two per week folding, on average.

Alan Fisco, president and chief financial officer of the Seattle Times, told legislators during a Senate Ways and Means Committee hearing Tuesday that the industry now faces new threats from tariffs on Canadian newsprint and aluminum.

“I can assure you that the number of closures will escalate quickly at small community newspapers, who are particularly vulnerable as they’re far more dependent on print revenue compared to digital,” Fisco said. “We have to do everything that we can to protect journalism jobs that remain, and hopefully provide incentives to grow them.”

A 2022 report released by the League of Women Voters found that Washington lost 24 weekly and three daily newspapers between 2004 and 2022, about 20% of the publications in the state.

The report found that of the newspapers that remain operational, many have slashed their newsroom staff, cut the frequency of their publication, reduced their number of pages, increased the price of a subscription or limited their coverage areas to either raise more revenue or decrease costs.

Dee Anne Finken, a former journalist and professor who spoke on behalf of the League of Women Voters, told members that while the organization doesn’t believe the government should “bail out news industries or news outlets,” it believes “that government has a responsibility to ensure conditions exist so that local news outlets can do their job of informing all Washingtonians, including elect officials.”

“That is how we can all work together to solve the problems, if we know about them,” Finken said.

In recent years, the Legislature has made other efforts to boost local journalism coverage in the state. In 2023, the Legislature appropriated $2.4 million for a two-year fellowship program through the Edward R. Murrow College of Communication at Washington State University.

Under the program, journalists in the early stages of their careers are placed in newsrooms throughout the state, including The Spokesman-Review, to cover underreported beats, which include voting rights, housing and rural issues, among others.

Former state Sen. Karen Keiser, a former reporter in California, Oregon and Washington, championed the program while in office. Now retired, Keiser told committee members Tuesday the tax “will enhance local news coverage” while increasing awareness of statewide and local issues.

“We can’t have a healthy democracy without an informed public. We need this kind of information flow,” Keiser said. “And right now, our online platforms do not pay a fee, or a royalty, for the use of the work product that they publish and sell ads for and make a profit on. Not a dime.”

However, Rose Feliciano, who spoke on behalf of the technology trade association Technet, told the committee that the organization believes the legislation is based on “the false premise that a handful of social media companies and search engines are responsible for causing and solving the problems of local news journalism.”

“The struggles facing the news industry predate social media,” Feliciano said. “First radio, then television, and now the internet have changed people’s habits and have had an impact on traditional news publishing.”

Feliciano also suggested the bill could violate the Internet Tax Freedom Act, a federal law that prohibits states and local jurisdictions from adopting taxes on online activity.

Kelly Fukai, CEO of the Washington Technology Industry Association, said “market-driven adaptations,” such as philanthropic support, digital subscriptions and new and engaging content, should be the solution to the decline in local journalism, rather than a new tax.

The legislation passed out of the Senate Commerce Committee earlier this session. As of Friday afternoon, it has not been scheduled for an executive session in the Ways and Means Committee.