ANYONE WILL COME TO ORDER. THANK
YOU ALL FOR BEING HERE. WE DON'T
HAVE A QUORUM YET. I WANT TO
THANK SENATORS BRADFORD AND
DOLLY FOR BEING HERE ON TIME. I
WE'LL WAIT FOR ONE MORE MEMBER
BEFORE WE DO HAVE A QUORUM, SO
WE'RE GOING TO DEFER THE
ADOPTION OF THE COMMITTEE RULES.
WE HAVE THREE BILLS IN OUR
DOCKET TODAY, PLUS AN
INFORMATIONAL HEARING ON
SUSTAINING JOURNALISM IN
CALIFORNIA. UH, THE THREE BILLS
ARE S¼ VÆ 911 BY SENATORS TO S¼
B 1004 BY SENATOR WILKIN S¼ B
927 BY SENATOR DOLLY I DO SEE
THAT SENATOR SEAR IS HERE ON
THANK YOU, SIR. SO WE'LL BEGIN
AS A COMMITTEE AS A WHOLE WILL
HOLD OFF ON MOTIONS UNTIL WE
HAVE A QUORUM. SENATOR SARTO, WE
WELCOME YOU TO THE COMMITTEE.
THIS IS ITEM NUMBER ONE S¼ B
911. VERY GOOD. THANK YOU. AND
GOOD MORNING COMMITTEE MEMBERS
AND THANK HONORABLE CHAIR. I'M
HERE TO PRESENT S¼ P 911 S¼ P
911 IS SIMILAR TO THE BILL. YOU
HAVE HEARD JUST THIS LAST YEAR
FROM OUR COLLEAGUES IN THE
ASSEMBLY, WHICH IS A B 46. WHILE
SIMILAR SB 911 SPECIFICALLY
MAKES THE 1ST $20,000 OF ANNUAL
PAYMENTS OF SURVIVOR BENEFITS
FREE WITHIN CALIFORNIA. NARROWLY
FOCUSED THIS BILL TO JUST
SURVIVORS AND THIS LIMITED
AMOUNT FOR A FEW REASONS. FIRST
THESE SURVIVING SPOUSES AND
CHILDREN HAVE LOST THEIR PRIMARY
SOURCE OF INCOME WITHIN THE LAWS
OF THE WITH THE LOSS OF THE
MILITARY MEMBER OR VETERAN AND
THEN SECOND BY CAPPING THE
EXEMPTION AT 20,000. I AM
FOCUSING THE RELIEF TO THE
STRUGGLING THE MORE STRUGGLING
FAMILIES. UNFORTUNATELY
CALIFORNIA IS LOSING THIS
POPULATION TO THE TUNE OF ABOUT
800 TO 1000 PEOPLE PER YEAR, AND
THIS IS WELL BEYOND THE NATIONAL
AVERAGE BY ALMOST TRIPLE DIGITS.
CALIFORNIA'S RATE OF LOSS OF
THIS POPULATION GOES WELL ABOVE
ANY STATISTICAL RATE OF LOSS
SEEN THROUGHOUT THE COUNTRY BY
MULTIPLE OF FOUR. THIS RATE OF
DECLINE IS MANIFEST IN
CALIFORNIA FROM GOING TO NUMBER
ONE IN THE NATION AND BEING HOME
TO THESE RECIPIENTS TO NOW IN
UNDER FIVE YEARS, BEING NUMBER
THREE, WHICH IS BEHIND TEXAS AND
FLORIDA. SIX STATES IN THE LAST
SIX YEARS HAVE MOVED TO FULLY
EXEMPT THESE PAYMENTS FROM
INCOME TAXES. THERE ARE NOW 48
STATES IN THE COUNT IN THE
COUNTRY. THAT FULLY OR PARTIALLY
EXEMPT THESE BENEFITS FROM TAXES
, AND WE ARE LEFT WITH VERMONT
AS THE LAST TWO STATES THAT
FULLY TAX THESE BENEFITS AS
INCOME. SO WHY THE $20,000 CAP?
OF THE 14 STATES THAT PARTIALLY
TAX THIS BENEFIT. THE AVERAGE
BETWEEN THEM IS $20,000. BY
PASSING THIS BILL S¼ B 911,
CALIFORNIA CAN CATCH UP WITH THE
NATIONAL AVERAGE. TO PROVIDE
PARTIAL RELIEF. TO THE FAMILIES
THAT HAVE LOST THEIR LOVED ONE.
COLLEAGUES I'VE BEEN TRYING TO
PUSH THIS BILL FOR THE LAST
THREE YEARS, AND IN THAT TIME WE
HAVE LOST ANOTHER 2 439 OF THE
PEOPLE WHO RECEIVE THESE
BENEFITS. WHICH TRANSLATES TO
ABOUT $40 MILLION IN LOST
FEDERAL INCOME. TO THE STATE AND
ECONOMIC BENEFIT. S¼ B 911 WILL
HELP THESE BRAVE FAMILIES THAT
HAVE SACRIFICED SO MUCH FOR OUR
COUNTRY AND WILL HELP CALIFORNIA
SO THE COUNTRY THAT WE TRULY
SUPPORT NOT JUST OUR VETERANS,
BUT THEIR FAMILIES AS WELL. SO I
RESPECTFULLY ASK FOR YOUR I VOTE
. THANK YOU, SENATOR S¼. WE DO
HAVE A QUORUM NOW, SO I'M GOING
TO ASK THE SECRETARY TO CALL THE
ROLL. SENATORS GLASER GLASER
HERE SENATORS DOLLY ASHBY.
BRADFORD BRADFORD HERE, DOG.
PADILLA PADILLA HERE, SKINNER,
YOU HAVE A QUORUM. SO YOU HAVE A
QUORUM PRESENT. SENATOR SARA, DO
YOU HAVE ANY PRINCIPAL WITNESSES
IN FAVOR? I DID NOT BRING ANY
PRINCIPAL WITNESS. SO THAT'S
THEN GO TO THOSE WHO ARE HERE IN
THE HEARING ROOM WILL TAKE
TESTIMONY FROM THOSE WHO ARE IN
FAVOR. OUR GENERAL RULES HERE AT
THE COMMITTEE WILL BE TWO
MINUTES TWO WITNESSES TWO
MINUTES EACH ON EACH SIDE. AND
THEN EVERYONE ELSE IS KIND OF A
ME TOO. BUT SINCE WE DON'T HAVE
ANY WITNESSES, WE'LL GO TO YOU
FIRST FOR YOUR INTRODUCTION.
THANK YOU SO MUCH, AND I AM JUST
A ME TOO. BUT NICOLE ORTMAN ON
BEHALF OF SAN BERNARDINO COUNTY
BOARD OF SUPERVISORS AND SUPPORT
GREAT. THANK YOU ANY OTHER
WITNESSES HERE IN SUPPORT? COME
ON UP. SCOTT COOP AND HOWARD
DRIVES TAXPAYERS ASSOCIATION AND
SUPPORT GREAT ANY OTHER
WITNESSES. ALL RIGHT, SEE YOU.
NOW WE'LL GO TO WITNESSES IN
OPPOSITION. ANYONE HERE IN
OPPOSITION TO THIS BILL, PLEASE
COME FORWARD. ALL RIGHT. I SEE
THEM. I BRING IT BACK TO THE
COMMITTEE FOR QUESTIONS OR
COMMENTS MEMBERS. ANY QUESTIONS
OR COMMENTS FOR SENATOR SUTO.
I'LL MOVE THE BILL. I SEEN
SENATORS TO THANK YOU FOR YOUR
GREAT WORK IN THIS SPACE, UH,
FOR OUR WONDERFUL VETERANS AND
THEIR SURVIVORS HAPPY TO SUPPORT
THE BILL TODAY. DO YOU WANT TO
HAVE ANYTHING TO SAY IN YOUR
CLOTHES? OR WE SIMPLY ASK FOR
YOUR EYE BOAT, RIGHT, SENATOR?
JOLLY HAS MOVED THIS BILL. LET'S
DO THIS, THOUGH. SHOULD WE DO
THE RULES BEFORE A VOTE? OK SO
I'M GOING TO DEFER SENATOR
DOLLY'S MOTION FOR JUST A
MOMENT. REMEMBER THIS IS OUR
FIRST MEETING OF THE YEAR SO
THERE ARE COMMITTEE RULES THAT
WE ARE REQUIRED TO ADOPT. I HOPE
THAT EVERYONE HAS HAD AN
OPPORTUNITY TO REVIEW THEM. AND,
UH, IS THERE ANY DISCUSSION ON
THE SEEN THAT AS THEIR MOTION.
THE VICE CHAIR MOVES THE
ADOPTION OF THE RULES WITH THAT
SECRETARY, PLEASE CALL THE ROLL.
MOTION IS MOTION IS TO ADOPT
COMMITTEE RULES. SENATORS GLAZER
GLASER, I DOLLY DOLLY! I ASHBY
ASHBY. I BRADFORD BRADFORD I
DODD, PADILLA, PA. I SKINNER 520
. OK, ALL RIGHT, UH, WE'RE GOING
TO DEFER THAT CLOSE ON THE RULES
TILL OUR ABSENT MEMBERS ARE
HERE. SO NOW I WANT TO RECOGNIZE
THE MOTION FROM SENATOR DOLLY.
THIS WOULD BE A DO PASS TO
MILITARY AND VETERANS AFFAIRS
COMMITTEE. THAT SECRETARY PLEASE
CALL THE ROLL. SENATORS GLASER
GLASER, I DOLLY DOLLY! I ASHBY
ASHBY. I BRADFORD. ON HØI
BRADFORD. I DON PERILLA I
SKINNER 5 TO 0 AT BILL HAS
ENOUGH VOTES TO GET OUT. BUT
WE'LL PUT IT ON CALL FOR ABSENT
MEMBERS. THANK YOU, SENATOR
DIARA. LET'S INVITE UP OUR NEXT
ON TIME, SENATOR. ALWAYS ON
TIME, SENATOR WILK. WELCOME TO
THE COMMITTEE. I THINK IT'S THIS
IS SB 1004. AND SENATOR WILKIE
CAN BEGIN WHEN YOU'RE READY.
HAVE TO PUT ON MY $3 READERS
FIRST. FAIRLY. WELL, GOOD
MORNING, MR CHAIRMAN AND
MEMBERS. I AM PLEASED TO PRESENT
S¼ B 1004, WHICH WOULD EXCLUDE
FROM TAXABLE INCOME SETTLEMENT
PAYMENTS MADE IN CONNECTION WITH
ANY WILDFIRE THAT OCCURRED IN
THE STATE. I'D LIKE TO FIRST
START BY ACCEPTING THE COMMITTEE
AMENDMENTS TO INCLUDE THE 10
YEAR SUNSET. THE LEGISLATURE IS
SPECIFICALLY THE SENATE HAS
DECIDED MULTIPLE TIMES IN THESE
SETTLEMENTS SHOULD NOT BE TAXED
IN 2022, SB 1246 AND A B 1 249
WERE SIGNED INTO LAW MAKING
SETTLEMENTS RELATED TO THE
THOMAS FIRE. THE WOLSELEY FIRE
THE BUTTE FIRE, THE NORTH BAY
FIRE AND THE CAMPFIRE TAX EXEMPT
. ADDITIONALLY S¼ B THREE 70 S¼
B 542 PROPOSED TO DO THE SAME
FOR THE KINCAID FIRE THE ZOG
FIRE AND PASS THE SENATE
UNANIMOUSLY IN 2023. IN 2020,
THE BOBCAT FIRE, WHICH BURNED
OVER 100 AND 15,000 ACRES IN AND
AROUND MY DISTRICT WAS
DETERMINED TO HAVE BEEN CAUSED
BY TREE COMING IN CONTACT WITH
POWER POWER LINES AND FOR ANY
SEDIMENTS MY CONSTITUENTS
RECEIVE RELATED TO THIS FIRE
WILL NOT BE TAX FREE BECAUSE THE
BOBCAT FIRE WAS INCLUDED IN THIS
PAST LEGISLATIVE EFFORT AND FOR
ME THERE'S ANOTHER ANOTHER CASE
OF WHERE YOUR PEN LIES BECAUSE
OF THE ZIP CODE YOU LIVE IN. SO
THIS PARTICULAR AREA, IT'S
RURAL. ACTUALLY TWO OTHER
CENTERS HAVE MORE OF THIS
TERRITORY THAN I DO. BUT NÓ ONE
HAS COME TO ADVOCATE FOR THEM.
SO THIS IS, UH, HAS COME
ORGANICALLY FROM SOME OF MY
CONSTITUENTS WHO LIVE IN THE
JUNE JUNIPER HILLS AREA. ANYWAY
ALL WILDFIRE VICTIMS SHOULD BE
AFFORDED THE SAME TAX RELIEF AS
THOSE AFFECTED BY PREVIOUSLY
MENTIONED FIRES. SB 1004 WILL
ENSURE THAT ALL WILDFIRE
SEDIMENTS ARE TAX FREE,
REGARDLESS OF WHERE THE PEOPLE
RESIDE WITH THAT, I RESPECTFULLY
ASK FOR AN I VOTE. THANK YOU,
SENATOR WILK. DO YOU HAVE
PRINCIPAL WITNESSES IN FAVOR? I
FEEL LIKE THIS IS SO COMPELLING
THAT I DID NOT NEED TO BRING
ANYBODY UP. OK ALL GOOD. WE'LL
GO TO THE FOLKS HERE ASSEMBLED
IN THE HEARING ROOM AS ANYBODY
WOULD LIKE TO COME UP AND PUT
THEIR NAME ON THE RECORD. FOR TO
PLEASE DO SO NOW. SCOTT KAUFMAN.
HARD DRIVES TAXPAYERS
ASSOCIATION SUPPORT. THANK YOU,
SIR. THANK YOU, SIR. ANYBODY
ELSE HERE IN THE HEARING ROOM?
ALL RIGHT. WE'LL GO TO
OPPOSITION. IS THERE ANYONE HERE
IN THE HEARING ROOM IN
OPPOSITION TO THIS FINE BILL.
SEE NÓ ONE STANDING OR COMING
FORWARD. OK, WE'LL BRING YOU
BACK TO THE COMMITTEE FOR
COMMENTS OR QUESTIONS, MEMBERS,
ANY COMMENTS, COMMENTS OR
QUESTIONS? ALL RIGHT. UH, WHEN I
RECOGNIZE THAT MOTION IN JUST A
MOMENT, SENATOR WILK. ANYTHING
YOU WANT TO SAY IN CLOSING,
RESPECTFULLY ASK FOR AN I VOTE.
THANKS FOR YOUR GOOD WORK IN
THIS AREA. RECOGNIZE THE MOTION
FROM SENATOR ASHBY? THIS WOULD
BE A NEW PASS AS AMENDED. TO THE
APPROPRIATIONS COMMITTEE WITHOUT
SECRETARY. PLEASE CALL THE ROLL.
SENATORS GLAZER GLASER, I DOLLY
DOLLY! I ASHBY ASHBY, I
BRADFORD. BRADFORD. I DON. I 5
TO 0. ALL RIGHT. THAT BILL HAS
ENOUGH VOTES. WE'LL PUT IT ON
CALL FOR A THANK YOU MEMBERS.
THANK YOU, SENATOR. WELCOME.
LET'S INVITE SENATOR DOLLY TO
JOIN US AT THE AT THE PODIUM.
HE'S PRESENTING ITEM NUMBER
THREE. THIS IS S¼ B 927. SENATOR
DOLLY WELCOME, THANK YOU. CHAIR
AND MEMBERS. I UM SO THIS BILL
IS SIMILAR TO, UH, SENATOR WILKS
BILL, BUT A LITTLE BIT DIFFERENT
. SO LET ME GIVE YOU THE
DIFFERENCES IN THESE BILLS. UH,
THIS BILL ACTS AUTHORIZES THE
ABILITY TO HAVE WHEN WE HAVE A
NATURAL DISASTER IN THE STATE
DID NOT HAVE TO PAY TAX ON THAT
INCOME JUST LIKE SENATOR WILK,
BUT HE HIS BILL IS NARROWED DOWN
TO THE FIRE THAT HE'S ON. SO
I'VE DONE MANY OF THESE BILLS.
OVER THE YEARS I HAD THE
CAMPFIRE. I HAD THE DIXIE FIRE.
EVERY FIRE WE'VE HAD. I'VE
AUTHORED THE BILL, ALONG WITH MY
FRIENDS IN THE SENATE OR
ASSEMBLY THAT HAVE BEEN AFFECTED
BY IT, AND EVERY SINGLE TIME THE
GOVERNOR AND THE LEGISLATURE HAS
EXEMPTED THOSE TAXES. SO THIS
BILL, WHAT DOES THIS BILL DO
THIS BILL? IT GIVES A STATEWIDE
OPPORTUNITY FOR IF THERE'S BEEN
CALLED FOR A NATURAL DISASTER BY
THE FEDERAL GOVERNMENT OR THE
STATE GOVERNMENT, IT
AUTOMATICALLY ALLOWS YOU TO NOT
HAVE TO PAY TAXES ON THOSE
REIMBURSEMENTS THAT COME FROM
YOUR INSURANCE OR FROM A
UTILITY. SO THAT'S WHAT THIS
BILL DOES. A LITTLE DIFFERENT
THAN THAT BILL AND MAKES IT JUST
IN STATUTE. AND LET ME TELL YOU
THE REAL REASON WHY THIS IS VERY
IMPORTANT. LIKE SENATOR WILKS
BILL, HE'S DOING THE BILL. THEY
HAVE ALREADY BEEN COMPENSATED.
AND WHEN YOU'VE BEEN
COMPENSATED, YOU HAVE TO PAY THE
TAX. SO WHEN YOU PAY THE TAX,
THEN YOU HAVE TO GO GET A REFUND
FROM THE TAX AFTER IT'S BEEN
PAID. THIS BILL WILL ALLOW YOU
BECAUSE OF THE STATUTE. IF WE
PASS THIS BILL, IT WILL ALLOW
YOU TO NOT HAVE TO PAY IT FIRST
AND THEN GO THROUGH THE PROCESS
OF REIMBURSING IT. SO FOR THOSE
REASONS, I ASKED FOR AN I VOTE
ON THIS BILL. IT'S COMMON SENSE
THAT IF WE'VE HAD A NATURAL
DISASTER, WHETHER IT'S FIRE,
WHETHER IT'S FLOOD, WHETHER IT'S
A MUDSLIDE IF IT'S BEEN
DESIGNATED AS A NATURAL DISASTER
BY THE FEDERAL GOVERNMENT OR THE
STATE, IT WILL ALLOW YOU TO NOT
HAVE TO PAY THOSE INCOME TAXES.
FOR THOSE REASONS. I ASKED FOR
AN HIGH VOTE. THANK YOU,
SENATOR. DO YOU DIDN'T MENTION
THE SUGGESTED TO DIE? SUNSET
AMENDMENT, I WILL TAKE THOSE
AMENDMENTS. I'M SORRY. UH AND
THERE'S SOME TECHNICAL
AMENDMENTS AS WELL. YOU'RE OK
WITH THAT. OK GOOD. ALL RIGHT.
WE'RE GONNA OPEN IT UP TO THE
COMMITTEE ROOM. ANYBODY HERE
WANT TO PUT THEIR NAME ON THE
RECORD IN SUPPORT OF THIS
LEGISLATION? PLEASE COME
FORWARD. SCOTT HOFFMAN. HOWARD
JARVIS TAXPAYERS ASSOCIATION
SUPPORT. THANK YOU, SIR. ANYONE
ELSE HERE IN THE HEARING ROOM?
ALL RIGHT. WE'RE GOING TO GO TO
OPPOSITION. IS THERE ANYONE HERE
IN THE HEARING ROOM IN
OPPOSITION TO THIS BILL? SEEN NÓ
ONE COMING FORWARD WILL BRING
THE MATTER BACK TO THE
COMMITTEE. ANY QUESTIONS OR
COMMENTS FROM COMMITTEE MEMBERS
QUESTIONS OR COMMENTS? WOULD YOU
LIKE TO CLOSE SENATOR ASK FOR I
VOTE. IT MAKES A LOT OF SENSE TO
ME THAT, UH, SINCE, UH WE PUT IN
PRACTICE THIS TYPE OF STANDARD
SO THAT WE DON'T HAVE TO HAVE
THESE ONE OFF BILLS. SO I
APPRECIATE YOUR LEADERSHIP IN
THIS AREA. IT COMES OUT OF
TRAGEDY. I KNOW FOR A LOT OF
YOUR CONSTITUENTS, UH, BUT IT'S
THE RIGHT THING TO DO. I'M HAPPY
TO SUPPORT IT TODAY. SO THAT IS
THERE. A MOTION FROM SENATOR
ASHBY'S MOVE THE BILL, THIS IS A
DUE PASS AS AMENDED TO
APPROPRIATIONS SECRETARY. PLEASE
CALL THE ROLL. SENATORS GLASER
GLASER, IY DOLLY DOLLY, I ASHBY
ASHBY. I BRADFORD. BRADFORD I
DON DO I PA I SKINNER 620. ALL
RIGHT, ALL RIGHT, SO THAT THAT
COMPLETES OUR BILL LIST FOR THIS
HEARING TODAY? WE ALSO HAD THE
RULES THAT WE'RE GOING TO WAIT
FOR ABSENT MEMBERS. I THINK WE
WERE A SHORT ONE MEMBER. TWO
MEMBERS. SENATOR DODD IS HERE SO
WE CAN VOTE ON THE RULES IN
ANOTHER TWO BILLS. ALL RIGHT,
WELL, WHY DON'T WE BEFORE WE
BEGIN THE HEARING ON JOURNALISM,
LET'S GO AHEAD AND GIVE SENATOR
DODD AN OPPORTUNITY TO ADD ON TO
THE ROLE. SO LET'S BEGIN WITH
BEGIN. DON'T GET USED TO IT. S¼
B 911 BY SENATOR SARTO THE
SECRETARY, PLEASE OPEN THE ROLL.
MOTION IS TO PASS TO THE
COMMITTEE ON MILITARY AND VÀ
AFFAIRS WITH THE CHAIR. VOTING I
VICE CHAIR VOTING I SENATOR TODD
. TODD, I 60. WE'RE GONNA PUT
THAT BILL BACK ON CALL. WE'LL GO
NEXT TO SENATE BILL 1004 BY
SENATOR WILK. SECRETARY. PLEASE
CALL THE ABSENT MEMBERS. MOTION
IS TO PASS A AMENDED TO THE
COMMITTEE ON APPROPRIATIONS WITH
THE CHAIR VOTING. I AM VICE
CHAIR VOTING I SENATORS DODD
DODD, I 6 TO 0. I WILL PUT THAT
BACK ON CALL FOR ABSENT MEMBERS.
WE'LL GO NEXT TO SENATE BILL.
ACTUALLY, WE'LL GO BACK TO THE
RULES. THIS IS THE ADOPTION OF
THE RULES. SENATOR DODD, THE
SECRETARY, PLEASE OPEN THE ROLL.
MOTION IS ADOPT. COMMITTEE RULES
WITH THE CHAIR. VOTING I VICE
CHAIR VOTING I SENATORS DODD,
DOD. I'M 60 0. WE'LL PUT THAT
BILL ON CALL FOR ABSENT THE
ABSENT MEMBER. OK WHAT? THERE
SHOULD BE ONE MORE. YOU VOTED ON
DOLLY WHEN YOU WALKED IN GOOD
KNOWLEDGE. YEAH, I'M PAYING
ATTENTION HERE IN THE CHEER SPOT
. IT'S A GOOD THING. ALL RIGHT,
UNLESS YOU WANNA VOTE A SECOND
TIME ON THAT. UM YOU'RE OK. ALL
RIGHT? ALL RIGHT, SO WE'RE
CAUGHT UP. OK WELL, LET'S MOVE
NEXT TO THE, UH, INFORMATIONAL
HEARING. SUSTAINING JOURNALISM
IN CALIFORNIA TAX AND TAX CREDIT
OPTIONS. I UH FIRST LET ME THANK
THE WITNESSES THAT WE'RE GOING
TO HEAR FROM IN A FEW MINUTES
FOR TRAVELING NEAR AND FAR TO
PARTICIPATE IN THIS HEARING. UM
YEAH, THIS DISCUSSION OF
SUSTAINING JOURNALISM. I THINK
OF IT THIS WAY. IT'S ONE PART
HEALTH CHECK. ONE PART. AUTOPSY.
AND IT'S ONE PART RESCUE
MISSION. AND IN MANY WAYS, IT'S
AN UNCOMFORTABLE CONVERSATION
FOR GOVERNMENT GOVERNMENTAL
LEADERS TO HAVE IT'S
UNCOMFORTABLE BECAUSE WE KNOW
THAT SUCCESSFUL JOURNALISM IS
INDEPENDENT. IS INDEPENDENT OF
GOVERNMENT. BUT WE ALSO KNOW
THAT DEMOCRACY THRIVES WITH AN
INFORMED CITIZENRY. AND
AUTHORITARIAN RULE SURVIVES ON
IGNORANCE. AND ITS INDEPENDENT
JOURNALISM THAT MAKES THE
DIFFERENCE. JAMES MADISON
DESCRIBED A ROBUST FREE PRESS AS
THE GREAT BULWARK OF LIBERTY. HE
BELIEVED THAT FREEDOM OF THE
PRESS WAS CRUCIAL TO THE ABILITY
OF CITIZENS TO GOVERN THEMSELVES
IN A DEMOCRATIC REPUBLIC. AND
THAT'S WHY HE LED THE EFFORT TO
MAKE JOURNALISM. THE ONLY
PROFESSION. AND THE ONLY
INDUSTRY THAT IS EXPLICITLY
PROTECTED IN OUR CONSTITUTION.
THE PAST 2.5 CENTURIES HAVE
PROVEN MADISON CORRECT. OUR FREE
PRESS INFORMED OUR PEOPLE AND
HELPED KEEP GOVERNMENT
ACCOUNTABLE. BUT IT'S CLEAR TO
ME AND I KNOW TO MANY OF YOU
THAT THE FREE PRESS IS IN
DECLINE. THE RISE OF THE
INTERNET HAS DEVASTATED THE
ECONOMIC MODEL THAT SUPPORTED
NEWSPAPERS AND OTHER PRIVATE
MEDIA FOR MORE THAN 100 YEARS.
THE NUMBER OF JOURNALISTS
EMPLOYED IN NEWSROOMS HAS
DECLINED BY MORE THAN 25% IN THE
LAST 15 YEARS. INCREASINGLY
COMMUNITIES HAVE NÓ INDEPENDENT
SOURCE OF LOCAL NEWS. NOW THAT
HAS CREATED A VACUUM. AND THAT
VACUUM HAS BEEN FILLED BY THOSE
WHO SEEK TO USE MISINFORMATION.
AND IN SOME CASES, CONSPIRACY
THEORIES TO CONFUSE AND
MANIPULATE OUR RESIDENTS. THE
EXACT THREAT THAT MADISON WARNED
AGAINST SO TODAY, THIS COMMITTEE
WILL EXAMINE WAYS OUR STATE
GOVERNMENT MIGHT FOLLOW THE LEAD
OF MANY DEMOCRACIES THAT HAVE
INVESTED CONSIDERABLE PUBLIC
RESOURCE IN SUPPORTING A FREE
AND INDEPENDENT PRESS. AND ONE
OF THE KEY QUESTIONS IS THIS.
CAN WE PROVIDE PUBLIC SUPPORT.
KEEP LOCAL NEWS ALIVE. WHILE
INCLUDING THE GUARD RAILS
NECESSARY. TO KEEP IT
INDEPENDENT. WE KNOW THAT THIS
IS NOT JUST A CALIFORNIA ISSUE.
MANY OF US HAVE BEEN WATCHING
DEVELOPMENTS AROUND THE WORLD IN
THIS SPACE ACTIONS THAT HAVE
BEEN TAKEN IN AUSTRALIA. IN
CAÑADA. IN VARIOUS EUROPEAN
COUNTRIES AND POD ACTIONS AND
ACTIONS EVEN TAKEN IN STATES
HERE IN THE UNITED STATES. WE'RE
GOING TO TALK ABOUT ONE IN
PARTICULAR MARYLAND. AND NOW
THIS GLOBAL PERSPECTIVE ALSO
PUTS A SPOTLIGHT. ON
DEMOCRACIES. IN SOME CASES. THE
DECLINE. DEMOCRACIES. THE NEW
YORK TIMES LAST WEEK DID SOME
REPORTING ON THE VISIT BY THE
HUNG HUNGARY PRIME MINISTER
VIKTOR ORBAN TO THE UNITED
STATES. HUNGARY. HAS A 35 YEAR
YOUNG DEMOCRACY. BUT IT'S IN
PERIL. AND AS THE REPORTING
COVERED ITS IN PERIL FOR A
VARIETY OF REASONS, NOT THE
LEAST OF WHICH IS THAT TAKEOVER
OF INDEPENDENT NEWS? IN HUNGARY.
AND THIS ISSUE OF OUR DEMOCRACY
IS VERY RELEVANT TO THIS
CONVERSATION. AND IN ANYWAYS,
IT'S KIND OF LIKE, WHAT ARE YOU
REALLY TALKING ABOUT DEMOCRACY
IN PERIL? BUT THERE'S A FEELING
BY MANY. THAT OUR DEMOCRACY IS
MORE FRAGILE THAN WE COULD HAVE
EVER EVER IMAGINED. AND AS WE
TALK ABOUT OUR RESCUE PLAN OR
THE MEDIA FOR THE FREE PRESS. IN
MY MIND, IT'S VERY INTRICATELY
RELATED TO THE PROTECTION OF OUR
DEMOCRACY. THIS HEARING HAS
THREE PARTS AND IT WILL BE
FOLLOWED BY PUBLIC COMMENT.
FIRST WE'RE GONNA HEAR FROM Kò
XJ, WHO WILL GIVE US AN OVERVIEW
OF THE CURRENT ADVERTISING
MARKET AND DESCRIBE THE EFFECT
OF CHANGES IN THE MARKET AND
NEWSPAPER REVENUES. SECOND DÂN
SHASKY AND NIKKI DOE. TWO OF THE
COUNTRY'S TOP TAX EXPERTS WILL
DISCUSS THE POTENTIAL THE
PITFALLS AND LESSONS LEARNED
REGARDING ADVERTISING, DIGITAL
ADVERTISING AND DIGITAL BARTER
TAXES. LASTLY LASTLY, WE'LL HEAR
FROM STEVE WALDMAN AND MATT
PIERCE REGARDING OPTIONS FOR TAX
INCENTIVES TO STOP THE DECLINE
AND FOSTER THE RECOVERY OF LOCAL
JOURNALISM IN THE STATE. IT'S
IMPORTANT TO NOTE THAT THIS IS
AN INFORMATIONAL HEARING. NÓ
DECISIONS HAVE BEEN MADE TO
LEGISLATE ON ANY OF THE ITEMS WE
WILL BE DISCUSSING HERE TODAY.
WE ARE HERE TODAY, FIRST AND
FOREMOST TO LEARN FROM WITNESSES
WITH GREAT EXPERTISE AND
EXPERTISE AND EXPERIENCE IN
THEIR RESPECTIVE FIELDS. OUR
GOAL IS TO LISTEN DIGEST THE
EXPERT TESTIMONY SO WE CAN BUILD
AN UNDERSTANDING OF THIS
IMPORTANT ISSUE THAT WILL BETTER
INFORM OUR DECISIONS THAT WE MAY
MAKE INTO THE FUTURE. SO I HOPE
THAT EVERYONE THAT'S LISTENING
TO WATCHING HERE IN THE HEARING
ROOM, UH, WILL APPROACH THE
TESTIMONY TODAY WITH OPEN MINDS
AND A KEEN EAR. AND I'M I'M
AWARE THAT MANY OF THESE ISSUES
ARE BOTH SUBTLE AND COMPLEX,
ESPECIALLY ESPECIALLY ABOUT
TAXATION. SO I THANK YOU IN
ADVANCE FOR YOUR PATIENCE AND
ATTEND AND ATTENTION. I WANT TO
ALSO CALL YOUR ATTENTION TO THE
EXCELLENT ANALYSIS THAT WAS
PREPARED FOR THE HEARING TODAY.
I WANT TO THANK COLIN UH,
GRINNELL FROM OUR STAFF. WHO'S
WHO'S PREPARED THIS AND I WANTED
TO, BECAUSE THAT SOMETIMES WHEN,
WHEN PEOPLE TESTIFY, YOU START
USING CODES AND PEOPLE DON'T SAY
WHAT'S THAT? WHAT ARE THOSE
INITIALS STAND FOR IN THE REST,
AND I WANT AT LEAST LAY THE
GROUNDWORK BY IDENTIFYING 22 IN
PARTICULAR LAWS THAT WE HAVE TO
FOLLOW THAT WE HAVE TO WORK WITH
AND AROUND IN ANY ACTIONS THAT
WE WOULD TAKE. THE FIRST ONE IS
CALLED THE INTERNET TAX FREEDOM
ACT. THE INTERNET TAX FREEDOM
ACT, UH, AND THAT'S TO PREVENT
DISCRIMINATION AGAINST UH,
DIGITAL COMMERCE, SO YOU'LL HEAR
THAT SPOKEN A LOT BY THE
WITNESSES. THERE'S ALSO THE
COMMERCE CLAUSE THAT PREVENT
DISCRIMINATION FROM ONE STATE TO
ANOTHER, SO YOU'LL HEAR ABOUT
THOSE 22 LAWS AND THE THIRD ONE
THAT WE'RE REALLY NOT GOING TO
TALK ABOUT TODAY BUT IS RELEVANT
IN THIS SPACE IS FEDERAL
COPYRIGHT LAW? UM THERE ARE
LIMITATIONS TO WHAT STATES CAN
DO IN THAT SPACE. THERE'S
CERTAINLY A CONCERN ABOUT
WHETHER OR NOT THE USE OF WHAT
THEY WOULD CONSIDER COPYRIGHT
MATERIAL IN IN OUR MEDIA OUTLETS
IS BEING PROPERLY USED BY THE
PLATFORMS. THERE'S LITIGATION IN
THAT SPACE, AND IT'S RELEVANT,
BUT IT'S NOT SOMETHING WE'RE
GOING TO BE TALKING ABOUT TODAY.
FINALLY LET ME JUST, UH, EXPRESS
A COUPLE OF THANK YOUS, UH,
ASSEMBLY MEMBER, BUFFY WICKS HAS
SHOWN GREAT LEADERSHIP AND
PARTNERSHIP WITH ME AND MANY
MEMBERS ON THIS ISSUE OF
PROTECTING AND SUPPORTING
JOURNALISM. SHE HAS LEGISLATION
THAT'S PENDING HERE IN THE
SENATE, AND IT COMES OUT OF A
VERY DEEP COMMITMENT TO THIS
ISSUE THAT WE'RE DISCUSSING
TODAY AND I WANT TO THANK HER
FOR HER LEADERSHIP. SECONDLY I
WANT TO THANK THE STAFF OF THE
SENATE JUDICIARY COMMITTEE. I
KNOW THAT OUR CONSULTANT RELIED
ON THEIR WORK. THE HEARING WE
HELD AT CHAIR UMBERG HELD IN
DECEMBER THAT RELATED TO THE
SUBJECT AND WE'VE TAKEN
ADVANTAGE OF THEIR GOOD WORK AND
RESEARCH IN THE PRESENTATION
THAT'S HERE TODAY. FINALLY I
WANT TO THANK THE STAKEHOLDERS
INVOLVED. CERTAINLY THE
JOURNALISTS, THE PUBLISHERS, BIG
AND SMALL COMMUNITY ETHNIC, UH,
AND, UH, AS WELL AS THE
PLATFORMS THAT WE ARE GOING TO
BE TALKING A LITTLE BIT ABOUT.
AND THE TESTIMONY THAT YOU'RE
ABOUT TO HEAR SO WITH THAT I
WANT TO INVITE ANY OTHER MEMBER
OF THE COMMITTEE WANTED TO MAKE
ANY OPENING REMARKS, AND THEN
WE'LL BEGIN WITH OUR WITNESSES,
SENATOR DOLLY ANYTHING YOU WANT
TO SAY ANY OTHER MEMBERS. OK?
ALL RIGHT, SO LET ME INVITE UP.
UH, Kò XJ COME ON UP HERE TO THE
FRONT. Kò X WORKED AT META FROM
2006 TO 2020 THREE MANAGING ADS
AND PAYMENTS IN THEIR
ENGINEERING TEAM. HE WAS A VICE
PRESIDENT FOR FACEBOOK GROUPS
AND OTHER PRODUCTS AND HEAD OF
THEIR HEALTH AREA. HE'S A BOARD
MEMBER AT CIVIC NEWS. COMPANY
AND ADVISOR TO REBUILD LOCAL
NEWS BRINGS A LOT OF EXPERTISE
IN THIS SPACE. Kò X. IS THAT OK
TO CALL YOU Kò X? OK MAKE SURE
HIS MICROPHONE'S ON WE WELCOME
YOU TO THE COMMITTEE AND WE LOOK
FORWARD TO YOUR TESTIMONY. THANK
YOU FOR HAVING ME IS THE UM,
PRESENTATION, ABLE TO PRESENT MY
SLIDES OR IT SHOULD. WHO WHO GOT
YOU WANT TO GO TO YOUR
POWERPOINT? IT'S ON THE SCREEN.
THERE IT IS, OK, TOOK A LITTLE
PAUSE, BUT IT'S UP THERE FOR
EVERYONE TO SEE OK. AND YOU CAN
BRING THEM UP FOR A LITTLE BIT
CLOSER SO WE CAN MAKE SURE WE
HEAR YOU OK? KIND OF LIKE, GET
THE ALL RIGHT. WONDERFUL WELL,
THANK YOU, UH, FOR YOUR WORK ON
THIS TOPIC, UH, FOR CONVENING
THIS HEARING, AND FOR HAVING ME
HERE TODAY, AS YOU MENTIONED, MY
NAME IS Kò X JIN AND I'M
SPEAKING IN A PERSONAL CAPACITY,
BUT, UH, RELEVANT BACKGROUND
INCLUDES LEADING THE ADS
ENGINEERING TEAM AT META FROM,
UH, ESSENTIALLY THE BEGINNING
THROUGH THE IP Ó, UH, ALSO, IF
YOU SPEAK UP JUST A LITTLE BIT,
ALSO SERVING AS A BOARD MEMBER
ON THE CIVIC NEWS COMPANY, WHICH
IS ONE OF THE LARGEST, UH, LOCAL
NEWS NONPROFIT. ORGANIZATIONS IN
THE UNITED STATES AND AS AN
ADVISOR TO BE LOCAL NEWS. SO
TODAY, I'M GOING TO TALK ABOUT
THREE SPECIFIC THINGS. FIRST IS
HISTORICAL TRENDS OF ADVERTISING
SPEND IN THE UNITED STATES,
INCLUDING FOR THE NEWSPAPER
SECTOR, SPECIFICALLY. THE SECOND
IS A DEEP DIVE ON THE CURRENT
STATE OF DIGITAL ADVERTISING,
WITH ESTIMATES OF REVENUE BY
COMPANY AND SOME IMPLICATIONS
FOR CALIFORNIA. AND LASTLY, I'M
GOING TO GIVE AN OVERVIEW OF
EXISTING AD TAXATION APPROACHES,
INCLUDING REVENUE SIZING FOR
CALIFORNIA AND SOME OF THE
POTENTIAL ECONOMIC TRADE OFFS
THAT NEED TO BE WEIGHED. SO
HISTORICAL TRENDS. 1980 THE
TOTAL U S¼ ADVERTISING SPEND HAS
ROUGHLY DOUBLED. AND THE
NEWSPAPER SECTOR. SPECIFICALLY
NEWSPAPER ADVERTISING REVENUES
PEAKED AROUND THE YEAR 2000. AND
IF YOU LOOK AT THEIR SHARE OF
OVERALL ADVERTISING REVENUE, OR
THEIR SHARE OF THE OVERALL
SECTOR THAT'S ACTUALLY BEEN
DECLINING SINCE THE 19 NINETIES.
INITIALLY THIS DECLINE WAS
COINCIDENT WITH FASTER GROWTH IN
Tð VÆ. YOU CAN SEE THIS IN THE
1990 TO 2000 PERIOD AND THEN
AFTER 2000, YOU SEE THIS
ACCELERATED DECLINE ON THE
INTERNET CHANNEL SIDE. SO WHAT
HAPPENED? AND YOU KNOW WHAT ARE
THE DRIVERS FOR THIS DECLINE,
ESPECIALLY POST 2000. SO
FUNDAMENTALLY, THE INTERNET JUST
MADE IT CHEAPER AND EASIER FOR
SELLERS AND BUYERS TO REACH EACH
OTHER AS AN EXAMPLE, UH, IF IT'S
1995, AND I'M TRYING TO SELL A
CAR, I'M TYPICALLY, UH, HAVE
ONLY A FEW OPTIONS, RIGHT? I'M
PROBABLY GONNA PUT SOMETHING IN
THE AUTOMOTIVE SECTION OF THE
CLASSIFIEDS. IF YOU FAST FORWARD
FIVE OR 10 YEARS THAT'S CHANGED.
I HAVE A LOT MORE OPTIONS. NOW I
COULD GO TO CRAIGSLIST. I COULD
GO TO ONE OF THE MANY ONLINE
CLASSIFIEDS AND YOU FAST FORWARD
ANOTHER FEW YEARS. YOU ALSO
HAVE, UH, THE INTERNET PLATFORMS
AND SO YOU'RE PROBABLY GOING TO
START DOING THIS. INSTEAD OF
BUYING A CLASSIFIED AD RIGHT?
IT'S POTENTIALLY A HIGHER USE OF
YOUR INVESTMENT. AND THAT'S
ESSENTIALLY WHAT HAPPENED. AND
YOU SEE THIS IN THE DATA ITSELF
HERE, SO, UH, CLASSIFIEDS HAD A
STEEPER INITIAL DECLINE, WHICH
THEN CONTINUED AS THE LARGEST AD
PLATFORMS ALPHABET AND META
DREW. IT'S PROBABLY WORTH NOTING
THAT THE DECLINE WASN'T SOLELY
ATTRIBUTABLE TO THE SAME
ADVERTISER MOVING SVEN FROM, UH
LIKE NEWSPAPER TO ONLINE, FOR
EXAMPLE, IN THE EXAMPLE I GAVE
IN THAT CASE, IT'S POSSIBLE THE
ADVERTISING MIGHT HAVE, JUST
LIKE SPENT LESS IN ADVERTISING
OVERALL, RIGHT, LIKE YOU KNOW,
PREVIOUSLY YOU WOULD PAY BY THE
COLUMN IN ON THE CLASSIFIED SIDE
. NOW YOU CAN POST ON CRAIGSLIST
FOR FREE OR FOR A NOMINAL FEE.
AND SO IT'S POSSIBLE THAT LIKE
FOR THAT ADVERTISING WOULD BE
TOTAL ADVERTISING SPEND ACTUALLY
WENT DOWN, EVEN THOUGH FROM AN
EFFICIENCY PERSPECTIVE, IT WAS
BETTER FOR THEM AT THE SAME TIME
ON THE INTERNET SIDE. THERE ARE
ALSO LOTS OF BUSINESSES WHO
MAYBE PREVIOUSLY WERE NOT ABLE
TO ADVERTISE, UH EFFECTIVELY AND
ARE NOW ABLE TO DO THAT. AND SO
IT'S A MIX OF THOSE TWO FACTORS,
AS WELL AS SOME REAL SHIFT FROM
EXISTING ADVERTISER SPEND, UH TO
OTHER CHANNELS. THAT SAID, I
THINK THREE THINGS ARE VERY
CLEAR. THE FIRST IS THAT THE
INTERNET DISRUPTED NEWSPAPERS
AND BUSINESSES AND THAT
SUBSCRIPTIONS HAVE NOT MADE UP
FOR THE DIFFERENCE. THE IS THAT
THE DIGITAL AD SECTOR AND IN
PARTICULAR, THE LARGEST
PLATFORMS HAVE SIGNIFICANTLY
GROWN IN REVENUES OVER THAT SAME
TIME PERIOD, AND THE THIRD IS
THAT WHATEVER THE DIGITAL AD
SECTOR IS CURRENTLY CONTRIBUTING
TO LOCAL NEWS HAS CLEARLY NOT
OFFSET THOSE LOSSES THAT WE'VE
SEEN IN THIS TIME PERIOD. AND
THAT'S PROBABLY THE THREE
TAKEAWAYS THAT ARE MOST
IMPORTANT FOR THIS CONVERSATION.
SINCE THERE'S GOING TO BE A LOT
OF FOCUS ON THE DIGITAL
PLATFORMS, IT'S ALSO WORTH
TALKING A LITTLE BIT ABOUT HOW
THEY WORK AT A HIGH LEVEL. AND
UH, ESSENTIALLY, THERE ARE THESE
TWO SIDED MARKETPLACES ON THE
ONE SIDE IS THE SELLER AND ON
THE OTHER SIDE IS THE USER OR
THE POTENTIAL BUYER, AND THEY
ESSENTIALLY TRY TO MATCH UH,
SELLERS WITH BUYERS. SO THEY
TAKE INPUTS FROM SELLERS,
INCLUDING WHAT YOU WANT TO SELL,
UH, WHO YOU WANT TO REACH AND
HOW MUCH YOU'RE WILLING TO PAY.
AND THEY TAKE IMPACTS FROM USERS
, RIGHT? HOW MUCH THAT STARTING
WITH THE TIME THAT THE USERS
SPEND ON THESE PLATFORMS AS WELL
AS DATA AND THEY ESSENTIALLY TRY
TO TAKE THESE INPUTS AND
EFFICIENTLY MATCH BUYERS TO
SELLERS? IN TERMS OF WHERE THESE
ADS SHOW UP? THEY CAN SHOW UP IN
SEARCH CONTEXT. SO THESE INCLUDE
GOOGLE SEARCH OR AMAZON SEARCH
AS WELL AS WHAT ARE CALLED
DISPLAY CONTEXT, SO THIS CAN
INCLUDE VIDEO ADS YOU SEE ON
YOUTUBE AS WELL AS NEWSFEED ADS
AND FACEBOOK. OR INSTAGRAM AND
IN TERMS OF THE DRIVERS FOR
IMPROVED RETURN ON INVESTMENT
FOR ADVERTISERS, WHICH,
ULTIMATELY, UH, IN THE LONG RUN
DICTATE ADVERTISERS SPEND THERE
IS NEARLY THREE INCREASING REACH
AND USER TIME SPENT. INCREASING
DATA AND IMPROVEMENTS IN THE
ALGORITHMS THAT MATCH. UH,
SELLERS WITH BUYERS ALL
INCREASED, SO A RETURN ON
INVESTMENT, AND IT IS ALSO WORTH
NOTING THAT, UM THEY'RE FAIRLY
OR UNFAIRLY, THE PLATFORMS
ACTUALLY HAVE SOME PRETTY
SIGNIFICANT COMPETITIVE
ADVANTAGES IN THIS MARKET THAT
HAVE DRIVEN SOME OF THE
CONSOLIDATION. OK SO THAT KIND
OF GOT US TO WHERE WE ARE TODAY.
AND SO, THE NEXT SECTION, I'M
GONNA DO A DEEP DIVE ON WHAT
THAT LOOKS LIKE. SO AS OF 2020,
THREE, ABOUT 65% OF THE
ADVERTISING SPEND IN THE UNITED
STATES IS ON DIGITAL CHANNELS.
SO THE MAJORITY THE SECOND IS Tð
VÆ. AND WITHIN DIGITAL, THE TOP
THREE PLATFORMS, ALPHABET, META
AND AMAZON ARE ROUGHLY 60% OF
ALL SPEND. YOU CAN SEE HERE THAT
AMAZON IN RECENT YEARS HAS BEEN
GROWING ITS SHARE IN THE OTHER
TWO HAVE BEEN A LITTLE BIT
SMALLER. AND THEN WITHIN DIGITAL
. WHAT IS THE CALIFORNIA
ATTRIBUTABLE REVENUE? SO IT'S
IMPORTANT TO NOTE THAT THESE
AREN'T TYPICALLY REPORTED
PUBLICLY. BUT ASSUMING THAT
CALIFORNIA REVENUE IS
PROPORTIONAL TO A SHARE OF
POPULATION IN THE UNITED STATES
WOULD SUGGEST ROUGHLY $30
BILLION A YEAR IN REVENUE TO
PEOPLE IN CALIFORNIA. UH AND OF
THAT 30 BILLION ROUGHLY 20
BILLION WOULD BE ATTRIBUTABLE TO
THE THREE COMPANIES THAT I
MENTIONED, AND YOU COULD ALSO
TRANSLATE THAT INTO A PER
PERSON, A FIGURE WHICH IS, YOU
KNOW ROUGHLY $800. PER YEAR. AND
THEN, FROM A TAXATION
PERSPECTIVE, I THINK AN
IMPORTANT CONSIDERATION IS
UNDERSTANDING THE PROFIT MARGINS
OF THESE COMPANIES AND AGAIN.
THESE ARE NOT SPLIT BY LOCAL
JURISDICTION, BUT THEY ARE
REPORTED ON AT THE GLOBAL LEVEL,
AND SO THE GLOBAL PERCENTAGE OF
NET INCOME SO FOR EVERY DOLLAR
OF REVENUE THAT I REFERRED TO
PREVIOUSLY YOU KNOW HOW MUCH OF
THAT, UH IS NET INCOME AFTER
COSTS AND AFTER TAXES RANGES
FROM 24 TO 29% LAST YEAR FOR THE
ALPHABET AND META, UH, IT'S ALSO
IMPORTANT TO NOTE THAT BECAUSE
THESE COMPANIES ARE ESSENTIALLY
CONGLOMERATES, THEY HAVE OTHER
BUSINESS LINES BESIDES
ADVERTISING THAT IF YOU WERE TO
SPLIT OUT THEIR ADVERTISING
SPECIFIC BUSINESS LINES, THE
MARGINS ARE LIKELY MUCH HIGHER.
SO METAS ARE LIKELY CLOSER TO
50% AND THAT'S GENERALLY
COMPARABLE ACROSS THE SECTOR. OK
SO IN THE LAST SECTION, I'M JUST
GONNA DO A BRIEF OVERVIEW OF AD
TAXATION MECHANISMS, AS WELL AS
SOME OF THE TRADE OFFS THAT
WOULD NEED TO BE CONSIDERED AS
WE CONSIDER THEM. SO THE FIRST
JUST DEFINITION LIKE WHAT OUR A
TAX IS. AND WHERE HAVE THEY BEEN
IMPLEMENTED? SO UH, FOR THIS
CONVERSATION AT TEXAS OUR TAXES
ON CORPORATE AD REVENUE, SO
THEY'RE ON THE OVERALL REVENUES,
AS OPPOSED TO NET INCOME THAT
ARE TYPICALLY APPORTIONED TO A
JURISDICTION AND CURRENTLY TWO U
S¼ STATES. THAT'S MARYLAND AND
NEW MEXICO AS WELL AS A AROUND
12 COUNTRIES GLOBALLY TAX
DIGITAL AD REVENUES. A SUBSET OF
THESE ALSO TAX NON DIGITAL AD
REVENUES AND HAVE BEEN DOING SO
FOR A LONGER PERIOD OF TIME. SO,
FOR EXAMPLE, AUSTRIA I BELIEVE
HAS TAXED OFFLINE ADVERTISING
SINCE THE YEAR 2000 AND, UH IN
2020 UPDATED ITS ADVERTISING
CODE TO ALSO COVER DIGITAL ADS.
THEN NOT DIRECTLY RELATED. BUT
ABOUT HALF OF ALL U S¼ STATES
TAX SALES OF SOME FORM OF
DIGITAL GOODS. HOW MUCH COULD BE
RAISED IN CALIFORNIA BY
ADVERTISING TAXES. OBVIOUSLY
THERE'S A LOT OF ASSUMPTIONS
THAT GO INTO THIS, BUT IF YOU
WERE TO AS A HIGH LEVEL TAKE A
RATE THAT'S COMPARABLE, OR MAYBE
ON THE LOWER END OF SOME OF THE
JURISDICTIONS THAT ARE READY,
ENACT THESE TAXES AND HAVE A
PRETTY HIGH PROGRESSIVE
THRESHOLD OF, YOU KNOW, 0%
MARGINAL TAX FOR THE 1ST 2
BILLION AND, UM, YOU KNOW 0.5 TO
4% ABOVE THAT, THAT WOULD GIVE A
ROUGH ESTIMATE OF SOMEWHERE
BETWEEN $6500 MILLION PER YEAR.
UH SO IN THE CONTEXT OF THE
LOCAL NEWS CONVERSATION, YOU
KNOW, WHY IS IT AT LEAST WORTH
CONSIDERING THESE AD TAXES? I
THINK THERE'S TWO REASONS THE
FIRST IS PRECEDENT. TAXES ARE AN
ESTABLISHED WAY TO ADDRESS
EXTERNALITIES AND TO PROMOTE
PUBLIC GOODS, EVEN WITHIN THE
TECHNOLOGY SECTOR. BROADLY THERE
IS AN EXAMPLE OF THE UNIVERSAL
SERVICE FUND AT THE FEDERAL
LEVEL, WHICH IS LEVIED AS A
PERCENTAGE OF REVENUES OF
TELECOMS AND THAT THAT FUNDING
THEN LATER GOES TO PROMOTE
UNIVERSAL SERVICE INITIATIVES.
AND AS I'VE DISCUSSED PREVIOUSLY
IT'S PRETTY CLEAR THAT THE RISE
OF THE INTERNET UNDERCUT THE
EXISTING AD SUPPORTED FUNDING
MODEL FOR LOCAL NEWS, WHICH HAS
CREATED A SOCIETAL COST, AND
THIS WOULD BE A WOULD BE A
DIRECT WAY OF ADDRESSING IT. THE
SECOND AND YOU KNOW, AS YOU ALL
KNOW, THIS IS ANY TYPE OF
INTERVENTION HAS TRADEOFFS AND
ADD TAXES HAVE JUST A DIFFERENT
SET OF TRADE OFFS FROM OTHER
APPROACHES FROM EXTRACTING
REVENUE FROM THE TECH SECTOR TO
SUPPORT THESE CAUSES, AND I
THINK IT JUST GIVES YOU A
DIFFERENT SET OF OPTIONS TO
WEIGH AS YOU YOU CONSIDER
FUNDING THE TRADE OFF SIDE. IT
IS ALSO QUITE IMPORTANT TO THINK
THROUGH THE POTENTIAL ECONOMIC
IMPACTS OF A TAXES AS WELL AS
WHAT THE BUSINESS IS SUBJECT TO
THE TAX MAY DO. AND SO HERE, I
BRIEFLY OUTLINE SOME OF THE
POTENTIAL RESPONSES, SO THE
FIRST IS THAT THE BUSINESS IS
SUBJECT TO THE TAX COULD CHOOSE
TO WITHDRAW FROM THE MARKET
INSTEAD OF PAYING THE TAXES IN
PRACTICE. THIS HAS NOT HAPPENED
IN ANY OF THE COUNTRIES THAT
HAVE ENACTED THEM. AND AS I
MENTIONED, YOU KNOW, OFFLINE HAS
BEEN TAXED FOR A WHILE WITHOUT
THIS ISSUE. THE SECOND IS THAT
BUSINESSES COULD CHOOSE TO
SHOULDER THE COSTS OF THOSE
TAXES THEMSELVES, AND THIS WILL
REDUCE THEIR PROFITABILITY. UH,
AS I MENTIONED, THE MARGINS OF
THESE BUSINESSES ARE IN THE 25
TO 50% RANGE, DEPENDING ON HOW
YOU COVER, SO YOU KNOW THE
PERCENTAGE OF THE TAX SHOULD BE
CONSIDERED RELATIVE TO THAT. THE
THIRD IS THAT THE BUSINESSES
COULD ALSO CHOOSE TO PASS THE
CASTS OF THOSE TAXES ON TO THEIR
CUSTOMERS. AND INSTEAD OF
SHOULDERING THE COST THEMSELVES,
AND, UH, THIS IF IT'S PASSED ON
TO THEIR ADVERTISING CUSTOMERS
INSTEAD OF THE USERS, THIS COULD
INCREASE THE COST OF ADVERTISING
SPENDING AND REDUCE AD SPEND ON
THE PLATFORMS THAT ARE SUBJECT
TO THAT TAX. AND IN PRACTICE
WE'VE ACTUALLY SEEN AT LEAST TWO
OF THEM DO THIS IN SOME OF THE
DIGITAL SALES TAX MARKETS. UH,
TODAY. AND THE LAST POINT AND
THIS IS MORE SPECIFIC TO LOCAL
NEWS IS, UH, IT IS POSSIBLE THAT
LIKE IN RESPONSE TO SOME OF
THESE THINGS THE BUSINESS IS
SUBJECT TO THESE TAXES MAY STOP
OR OTHERWISE REDUCE THEIR
VOLUNTARY OR OTHER EFFORTS THAT
PAY OUT TO THE NEW SECTOR TODAY,
AND SO IF YOU WERE TO DO THIS,
YOU NEED TO MAKE SURE THAT THE
AMOUNT RAISED VIA ANY TAX AND
CRITICALLY. HOW THAT TAX IS
ALLOCATED NEEDS TO BE MORE
IMPACTFUL FOR THE LOCAL NEWS
OUTCOMES YOU ARE TRYING TO
ACCOMPLISH THAN THE STATUS QUO
FOR THIS TO BE A NET. OVERALL
AND SOME OF THE ALLOCATION
MECHANISMS I THINK WILL BE
DISCUSSED LATER LATER TODAY. UH,
THE ONLY LAST POINT TO MAKE HERE
IS THAT THESE CONSIDERATIONS ARE
ACTUALLY THE SAME CONSIDERATIONS
FOR ANY FORM OF GOVERNMENT
MANDATED REVENUE EXTRACTION TO
FUND THESE EFFORTS. SO, UH, I, I
KNOW THERE'S A MORE BARGAINING,
CODE ORIENTED PROPOSAL, AND I
THINK SIMILARLY LIKE PLATFORMS
THAT ARE SUBJECT TO BARGAINING
CODE REQUIREMENTS COULD CHOOSE
TO WITHDRAW FROM THE MARKET OR
WITHDRAW FROM LINKS. GIVEN THAT
HOW THE BARGAINING CODE IS
STRUCTURED SHOULDER THE COSTS
THEMSELVES PASS COSTS TO THE
CUSTOMERS AND OUR REDUCED
VOLUNTARY EFFORTS. SO AS YOU'RE
CONSIDERING DIFFERENT MECHANISMS
FOR FUNDING, I THINK MY
RECOMMENDATION WOULD BE TO WEIGH
WEIGH THE TRADE OFFS AGAINST
EACH OTHER. AND THEN VERY
BRIEFLY. IT'S ALSO WORTH NOTING
THAT THERE ARE SOME LEGAL
CHALLENGES SPECIFIC TO THE
MARYLAND TAX. AND THESE ARE
GONNA BE COVERED MORE IN LATER
TODAY AS WELL. SO THANK YOU FOR
YOUR TIME AND YOUR FOCUS ON
THESE ISSUES, AND I HOPE THIS
HAS BEEN HELPFUL. THANK YOU VERY
MUCH. Kò X AND THANK YOU FOR
YOUR EXPERTISE. I HAD A COUPLE
OF QUESTIONS AND FOLLOW UP. SO I
YOU MENTIONED THIS ADVANTAGE
THAT HAS MADE THIS BIG SHIFT IN
ADVERTISING THAT THAT THAT
PERSONALIZED KNOWLEDGE OF WHO IT
IS THAT THAT, UH, THEIR
COMMUNICATING WITH IS JUST AN
ENORMOUS ADVANTAGE. AND YOU'VE
DONE THIS WORK FOR META. SO NOW,
I, I HIRE YOU TO WORK FOR A MORE
A NON DIGITAL UM OUTLET. YOU
KNOW WHAT? WHAT CAN THEY DO TO
COMPETE? IS THERE ANYTHING YOU
THINK THEY SHOULD BE DOING
DIFFERENTLY TO COMPETE IN THIS
AD MARKETPLACE? YEAH IT'S A GOOD
QUESTION. UM, SO BACK TO THE
SLIDE. WHERE YOU KNOW THE THREE
DRIVERS FOR R Ó. I ARE
FUNDAMENTALLY REACH LIKE WHO YOU
CAN REACH OR HOW MUCH TIME
THEY'RE SPENDING. YOU KNOW SOME
SPECIFICS ON DATA AND IMPROVE
THE ALGORITHMS. UM, I HAVE SEEN,
UH, THERE. THERE MAY BE SOME
INSTANCES WHERE THE SPECIFIC
AUDIENCE THAT, UH A NEWS OUTLET
OR OUTLET IS WRITING FOR IS LIKE
NICHE ENOUGH AND SPECIALIZED
ENOUGH THAT THEY HAVE UNIQUE
ADVANTAGES IN REACHING THAT
AUDIENCE IN WAYS THAT CANNOT BE
REACHED BY BY OTHER PLATFORMS,
AND, UH, THERE ARE SPECIFIC
SECTORS LIKE FOR EXAMPLE, ED
WEEK, WHICH IS A NONPROFIT NEWS
ORGANIZATION IN THE EDUCATIONAL
SECTOR, WHICH DOES SEEM TO HAVE
A PRETTY VIABLE AND GROWING
ADVERTISING BUSINESS BASED ON
THEIR 990. SO THERE ARE, I
THINK, SOME LIMITED EXAMPLE. OF
SUCCESSFUL ADVERTISING
BUSINESSES. AT THIS LEVEL, I'M
EXCLUDING KIND OF THE LARGE
NATIONAL CHANGE, WHICH I THINK
ARE A LITTLE BIT DIFFERENT TO
LIKE, LIKE THE NEW YORK TIMES,
UH, BUT IN AGGREGATE. UH, IT'S
NOT CLEAR TO ME. IF THAT, UM IS
WORKABLE FOR ALL OF THE TOPICS
AND SUBJECT AREAS THAT ARE
LIKELY IN THE PUBLIC INTEREST,
SO YOU KNOW, LIKE EDUCATION
HAPPENS TO HAVE SOME OF THESE
PROPERTIES. BUT IF YOU'RE
COVERING VOTING ADMINISTRATION
IF YOU'RE COVERING, UH, PUBLIC
HEALTH, IT'S NOT CLEAR IF FOR
EXAMPLE, THE A WEEK ADVANTAGE WE
TRANSLATE SO AND IF YOU'RE A
GENERAL CIRCULATION NEWSPAPER,
LIKE THE SAN FRANCISCO CHRONICLE
, THAT YOUR ABILITY TO IDENTIFY
NICHE NICHE AUDIENCE AND NICHE
ADVERTISERS IS MORE LIMITED. YES
AND I THINK THAT'S PARTLY WHY
YOU SEE ALLY THE CHALLENGES
HERE. ONE OTHER QUESTION. UM I
THINK THAT PEOPLE LISTENING
WOULD PROBABLY BE PRETTY
SURPRISED TO HEAR YOU SAY THAT,
UH, NUMBER THREE ADVERTISING. OR
A COMPANY THAT THE TOP THREE IN
ADVERTISING REVENUE IS AMAZON.
BECAUSE THEY'RE NOT SEEN AS A
SOCIAL MEDIA COMPANY. AND THAT
TRADITIONAL, I GUESS OR ONE
CONVENTIONAL WAY OF ITS WHERE
PEOPLE KIND OF A PUBLIC
ENGAGEMENT SPACE. IT'S JUST
WHERE YOU BUY STUFF. SO, UM YOU
KNOW WHAT? WHAT? UH, THEY DON'T
PROVIDE LINKS. LET'S SAY THEY
DON'T PROVIDE NEWS LINKS, WHICH
IS KIND OF BEEN A HOT TOPIC OF
DEBATE IN THIS SPACE. THEY JUST
SELL STUFF AND THEY'RE THEY'RE
THEY'RE THEY'RE IT'S ALL ABOUT
THAT PERSONAL DATA THAT THEY'VE
BEEN ABLE TO ACCUMULATE. ISN'T
IT? THE HEART OF IT? YEAH. AND I
THINK IF YOU GO BACK TO, UM THE
HOW THINGS WORK SLIDE ON THE
ADVERTISING SIDE AT THE END OF
THE DAY. YOU COULD VIEW
NEWSPAPERS IN COMPETITION FOR
TWO THINGS. THEY'RE IN
COMPETITION FOR A KIND OF REACH
AND ATTENTION AND THE USER SIDE
BUT THEN ON THE ADVERTISERS ON
THE BUSINESS SIDE, THEY'RE
ACTUALLY IN COMPETITION FOR
ADVERTISER, UH, DOLLARS. AND UH,
SO WHILE MAYBE ON THE LINK SIDE,
AMAZON ISN'T NECESSARILY
COMPETING THAT DIRECTLY WITH THE
NEWS ORGANIZATIONS ON THE
ADVERTISER SIDE ON THE BUSINESS
SIDE, I. I THINK THERE IS
PROBABLY MORE MORE OVERLAP LIKE
NOT NOT 1 TO 1 FOR THE POINTS I
MENTIONED EARLIER. BUT UM, YOU
KNOW IF YOU'RE A RETAILER,
TRYING TO SELL THINGS AGAIN, YOU
KNOW, 1995. YOU HAVE A LIMITED
SET OF OPTIONS ON ON HOW TO
ADVERTISE AND THE NEWSPAPERS ARE
LARGER AND YOU KNOW, FAST
FORWARD TO TODAY, AND IT'S VERY
DIFFERENT, INCLUDING AMAZON, YOU
KNOW AS AN OPTION, AND I THINK
SOME OF AMAZON'S UNIQUE
ADVANTAGES IN BOTH REACH AND
TRANSACTIONAL INTENT ON THE USER
SIDE AS WELL AS DATA, UH ARE ARE
NOW BEING USED TO BUILD UP A
PRETTY SUBSTANTIAL ADVERTISING
BUSINESS. AND IT'S NOT JUST
BECAUSE YOU CAN GET SOMETHING AT
A BETTER AMAZON. IS THAT, UH,
THAT THEY'VE THEY'VE CAPTURED
ALL THAT PERSONAL INFORMATION OF
WHO'S SEARCHING AND WHERE THAT
HAS MADE IT SO ATTRACTIVE.
THAT'S RIGHT. AND IT'S PROBABLY
NOTICED. IF YOU JUST GO TO
AMAZON. AND ANY TIME YOU'RE
SEARCHING FOR ANY, UH, THING.
THERE'S ADS, YOU KNOW, UH UH,
ALL OVER THE PLACE AND IT IS. I
BELIEVE IT IS ACTUALLY
PERSONALIZED BASED ON YOUR
ACCOUNT, SO THAT THAT'S HOW HOW
IT'S WORKING. GREAT QUESTIONS
FROM OTHER OTHER COMMITTEE
MEMBERS ON THIS I HATE POP UPS.
WELL Kò X. THANK YOU FOR YOUR
EXPERTISE IN THE SPACE FOR
SHARING IT WITH US TODAY. WE
REALLY APPRECIATE IT. THANK YOU
VERY MUCH. OUR NEXT STEP. WE
HAVE A SECOND PANEL WITH TWO
PARTICIPANTS. LET ME INTRODUCE
THEM AS THEY COME UP TO THE
FRONT. UM NIKKI DAUBE. IS A
SHAREHOLDER WITH GREENBERG TO,
UH AND NATIONALLY RECOGNIZED TAX
EXPERT. SHE HAS AN LLM FROM
CAPITOL UNIVERSITY LAW SCHOOL. J
Dð FROM THE UNIVERSITY OF OREGON
SCHOOL OF LAW. AND UH, NIKKI. I
KNOW YOUR PREVIOUS EXPERIENCE
INCLUDES SPENDING FIVE YEARS AS
A SENIOR TAX COUNSEL. COUNCIL ON
STATE TAXATION. I WORKED AT A
BIG FOUR ACCOUNTING FIRM AND A
LARGE INTERNATIONAL LAW AND
CORPORATE LAW FIRM IN OREGON AND
BEEN INVOLVED IN THIS ISSUE FOR
A LONG TIME. SO WE APPRECIATE
YOU COMING HERE AND SHARING YOUR
EXPERTISE AND THEN WE ALSO
INTRODUCE DAEN CHANSKY.
PROFESSOR SHASKY HOLDS AJ Dð
FROM STANFORD LAW SCHOOL. UH P
HÌ Dð FROM U èC BERKELEY IN
RHETORIC AND MA FROM MCGILL
UNIVERSITY IN PHILOSOPHY AND A B
A FROM COLUMBIA UNIVERSITY. UH,
BEFORE LAW SCHOOL, YOU WORKED AS
FINANCIAL CONSULTANT TO
CALIFORNIA, LOCAL GOVERNMENT AND
I KNOW AFTER LAW SCHOOL YOU'VE
WORKED AS AN ATTORNEY IN THE
PUBLIC FINANCE DEPARTMENT AT A
LAW FIRM THAT YOU CLERKED FOR
JUDGE PIERRE LAVELLE OF THE
UNITED STATES COURT OF APPEAL
THE SECOND CIRCUIT AND PROFESSOR
SHASKY. THANK YOU FOR YOUR
PARTICIPATION AND YOUR EXPERTISE
IN THIS SPACE. ARE WE GOING TO
START WITH PROFESSIONALS? ALL
RIGHT, WE'RE GONNA BEGIN WITH
YOU, IN FACT, SO WELCOME TO THE
COMMITTEE AND WE LOOK FORWARD TO
YOUR TESTIMONY. THANK YOU. IT'S
AN HONOR TO BE HERE. I BROUGHT
COPIES OF MY TESTIMONY AND A
REALLY FASCINATING LAW REVIEW
ARTICLE. SO I'M GONNA THAT I
CORO IT. I DON'T KNOW IF SHE
WILL HAVE THE SERGEANTS GRAB
THIS. SO THANK YOU. YOU CAN JUST
SIT THEM DOWN, AND THEY'LL
THEY'LL DISTRIBUTE THEM.
SPEAKING TO THE MICRO SO WE CAN
HEAR YOU PLEASE. GREAT CAN
EVERYBODY HEAR ME? OK OK. WELL
THANK YOU FOR THIS OPPORTUNITY
TO PRESENT, UM, ON THIS
IMPORTANT TOPIC TODAY.
CALIFORNIA LIKE MOST
JURISDICTIONS HAS CHOSEN TO TAX
CONSUMPTION. IT IS A FUNDAMENTAL
TO SOUND TAX POLICY TO TAX IN
THE ENTIRE TAX BASE. SO IF WE
TAX CONSUMPTION, WE SHOULD TAX
ALL OF IT. SO IF WE BUY A BOOK
OF MAPS AT A STORE, AND WE DO I
MEAN, WE TAX IT AND WE DO. WE
SHOULD ALSO TAX THE DOWNLOAD OF
A BOOK OF MAPS, AND WE SHOULD
ALSO DOWNLOAD A BARTER FOR
GOOGLE MAPS. AS IT IS CALIFORNIA
ONLY TAXES. THE FIRST
TRANSACTION, THE BOOK THE
PURCHASE OF A BOOK, NOT THE
DOWNLOAD OF A BOOK AND NOT THE
BARTER FOR ESSENTIALLY A SERVICE
THAT REPLACES THE BOOK. IF YOU
DON'T TAX AN ENTIRE TAX BASE,
YOU ARE GOING TO DISTORT
PEOPLE'S ECONOMIC BEHAVIOR AND
YOU'RE GOING TO GIVE AN UNFAIR
ADVANTAGE TO THOSE BUSINESSES
THAT ARE THE BENEFICIARIES OF
PROVIDING AN IN THIS CASE
UNTAXED CONSUMPTION. BORDERS ARE
OBVIOUSLY HARD TO TAX AND A LOT
OF CASES EVEN THOUGH THEY SHOULD
TECHNICALLY BE SUBJECT TO
TAXATION. UNDER THE SALES TAX,
THEY ARE NOT PRACTICALLY TAXED.
THAT SAID. WE'VE JUST LEARNED
THE BARTERS AT ISSUE IN THIS
CASE. USERS TRADING THEIR
PERSONAL INFORMATION IN RETURN
FOR SO CALLED FREE SERVICES FROM
ONLINE PLATFORMS IS NOT A SMALL
AMOUNT OF MONEY THAT THE STATE
SHOULD JUST SORT OF LEAVE ON THE
TABLE. OF COURSE, THERE IS A
QUESTION. WELL, HOW DO YOU TAX A
BARTER? RIGHT WHAT IS THE TAX
BASE? WHAT IS ITS VALUE? IN THE
FIELD OF TAXATION. IT IS VERY
COMMON TO USE REASONABLE PROXIES
IN A CASE LIKE THIS, AND IN THIS
CASE, A REASONABLE AND
ADMINISTRABLE PROXY FOR THE
VALUE OF THE BARTERS CURRENTLY
NOT BEING TAXED IS THE GROSS
RECEIPTS. EARNED BY THE
PLATFORMS ON THE OTHER SIDE OF
THE TRANSACTION. UNDERLYING
LOGIC IS THE FOLLOWING IF THE
GIRLS RECEIPTS GENERATED FROM
ALL THE ADS TO ROUGHLY PAY FOR
THE FREE SERVICES ON THE OTHER
SIDE, THEN WHY WOULD THE
PLATFORMS OFFER THESE SERVICES?
IS IT A PERFECT PROXY? NÓ? IS IT
A REASONABLE PROXY? YES. DID I
COME UP WITH THIS? NÓ IT'S ANY
OTHER. UM, LAWYER CLEVERLY COME
UP WITH THIS NÓ. IS THERE SOME
QUIRKY ECONOMIST WHO CAME UP
WITH IT? NÓ UM, TWO LEADING
ECONOMISTS IN THE NATIONAL TAX
JOURNAL, THE MAIN PEER REVIEW
JOURNAL IN ECONOMICS, WROTE A
PIECE TALKING ABOUT THIS THEORY
IN 2021, AND THEY WEREN'T EVEN
THE FIRST THEY WEREN'T TALKING
ABOUT IT AS SOMETHING NOVEL THAT
WE'RE TALKING ABOUT. IT IS
SOMETHING THAT IS WELL KNOWN,
AND I HAVE PROVIDED BECAUSE I
CAN'T HELP IT. I'M COPIOUS
FOOTNOTES OF THIS EFFECT. UM
ATTACHED, UM TO THE TESTIMONY.
SO WHAT I AM EXPLAINING TO YOU
IS NOT SOME OVERWROUGHT LEGAL
SUBTLETY. IT IS SIMPLY A
SENSIBLE WAY TO DEAL WITH THIS
PROBLEM. YOU USE THE GROSS
RECEIPTS AS A PROXY FOR THE
UNTAXED BARTER VALUE IN ORDER TO
FILL OUT A GAP IN YOUR
CONSUMPTION TAX BASE. THE STATE
SHOULD ALSO DEAL WITH TAXING
DOWNLOADS OF DIGITAL BOOKS AS
WELL. THAT IS A SEPARATE ISSUE
THAT A LOT OF OTHER STATES HAVE
ADDRESSED, AND IT'S ALSO JUST
UNCOMMON SENSE. THERE ARE OTHER
REASONS FOR THE STATE TO IMPOSE
A TAX LIKE THIS, FOR INSTANCE,
AGAIN HAS JUST TALKED ABOUT, UM
THESE DIGITAL PLATFORMS BECAUSE
OF NETWORK EFFECTS. THAT IS
BECAUSE OF THE, UM THEY'RE
ESSENTIALLY MONOPOLIES IN THEIR
SPACES. IT MAKES SENSE. UM
THEY'RE ABLE TO EARN SUPERNORMAL
PROFITS AND IT'S ECONOMICALLY
EFFICIENT TO TAX SUPERNORMAL
PROFITS AND WE CAN TALK MORE
ABOUT THOSE AS WELL. I SEE
MYSELF AS A LAW PROFESSOR,
PRIMARILY HERE TO TALK TO YOU
ABOUT ADMINISTRABILITY AND LAW.
AND SO I WANT TO MAKE SURE THAT
I I'M TALK ABOUT THOSE THINGS.
BEFORE I GET THERE. ONE OTHER
ISSUE ON THE POLICY SPACE. IT IS
COMMONLY SAID THAT STATES DO NOT
NEED THESE KINDS OF TAXES
BECAUSE THESE PROFITS OF FIRMS
LIKE FACEBOOK, THE SUPERNOVA
PROFITS ARE REACHED BY
CALIFORNIA'S STATE CORPORATE
INCOME TAX. AND I'M HERE TO TELL
YOU THAT THAT IS NOT TRUE. THE
SUPERNOVA PROPHETS LEARN BY
EARNED BY THESE LARGE
MULTINATIONAL CORPORATIONS ARE
SHIFTED ABROAD AND ARE NOT BEING
CAPTURED BY CALIFORNIA STATE
CORPORATE INCOME TAX UNLESS THIS
COMMITTEE AND I THINK WANTS TO
SHIFT TO WORLDWIDE COMBINED
REPORTING OR SOME OTHER
MECHANISM TO CAPTURE THESE
SHIFTED PROFITS. THAT IS NOT A
SOUND RESPONSE. FURTHERMORE EVEN
IF WE DID REACH THOSE SUPER DOM
PROFITS, THE CONSUMPTION TAX
BASE IS SEPARATE FROM THE INCOME
TAX BASE, RIGHT. WE TAX THE
PURCHASE OF A TANGIBLE PERSONAL
PROPERTY, SO THIS MUG IS SUBJECT
TO THE SALES TAX. WHETHER THE
MUG COMPANY EARNS A PROFIT OR
NOT. AND THEN IF THE M COMPANY
EARNS A PROFIT, AND THEY'RE A
CORPORATION, THEY'LL PAY THE
CORPORATE INCOME TAX ON TOP OF
IT. SO THE FACT THAT WE COULD
BUT DO NOT REACH THE PROFITS OF
THESE CORPORATIONS IS NOT
RELEVANT TO WHETHER OR NOT THEY
SHOULD BE TAXED AS PART OF THE
CONSUMPTION TAX BASE.
IMPLEMENTATION. 12 COUNTRIES AND
ONE STATE CURRENTLY HAVE DIGITAL
TAXES. ROUGHLY LIKE THE ONE
PROPOSED HERE. THE U Kò IS
APPARENTLY THE ONLY JURISDICTION
TO A PUBLICLY REPORTED ON ITS
EXPERIENCE. THIS EXPERIENCE HAS
BEEN POSITIVE, WITH
IMPLEMENTATION EASIER THAN
EXPECTED AND REVENUES HIGHER
THAN EXPECTED, RIGHT UNUSUAL FOR
A TAX. I COULD ABSOLUTELY
CONCEDE THAT, BUT THERE YOU GO
AND AGAIN, I. I èC TO IT, UM,
IN MY TESTIMONY. NÓ DOUBT
ATTACKS LIKE THIS WOULD BE
SUBJECT TO LEGAL CHALLENGE AS
MARYLAND'S FIRST IN THE NATION.
DIGITAL AD TAX HAS BEEN, I AM
HAPPY TO DISCUSS ANY AND ALL OF
THE LEGAL CHALLENGES AND HAVE
ADDRESSED THEM AT SOME LENGTH IN
THAT RIVETING LARVIE ARTICLE I
DISTRIBUTED, BUT I DON'T THINK
THAT'S THE BEST USE OF MY TIME.
I'LL END WITH MY ASSESSMENT OF
THE MAIN OBJECTION, WHICH SOUNDS
IN THE INTERNET TAX FREEDOM ACT.
THE INTERNET TAX FREEDOM ACT WAS
FIRST PASSED IN 1998 AND MEANT
TO BE TEMPORARY, AND IT WAS MADE
PERMANENT IN 2016 AND IN KEY
PART FORBIDS DISCRIMINATORY
TAXES ON ELECTRONIC COMMERCE.
AND SO THE ARGUMENT IS THAT
ATTACKS ON THE RECEIPTS FROM
DIGITAL ADS IS DISCRIMINATORY
BECAUSE THEY'RE NOT A SIMILAR.
THERE'S NOT A SIMILAR TAX ON NON
DIGITAL ADS. END OF STORY. THE
PRIMARY RESPONSE OR A PRIMARY
RESPONSE TO THIS ARGUMENT RELIES
ON THE POLICY ARGUMENT THAT I
HAVE JUST MADE, NAMELY THAT A
DIGITAL BARTER TAX WOULD NOT BE
A TAX ON ADS, BUT A TAX ON THE
UNTAXED CONSUMPTION USING AD
REVENUE AS A PROXY PUT ANOTHER
WAY. A DISCRIMINATION REQUIRES
THE TWO SIMILAR THINGS ARE
TREATED DIFFERENTLY SINCE
DIGITAL ADS ARE PART OF COMPLEX
BARTERS INVOLVING USER DATA AND
INFORMATION. THEY ARE NOT REALLY
SIMILAR, SITUATED TO SO CALLED
TRADITIONAL ADS BECAUSE YOU NOT
YOU CANNOT TAX DIGITAL A. YOU'RE
TAXING DIGITAL ADS BECAUSE THEY
ARE SPECIAL AND BEING A PROXY
FOR THE UNTAXED BARTER. I THINK
THESE ARGUMENTS ARE STRONG,
THOUGH IT IS TRUE THAT A LOWER
COURT JUDGE IN MARYLAND REJECTED
VERSIONS OF THESE ARGUMENTS IN A
DECISION SINCE VACATED. PERHAPS
BETTER VIEW OF WHERE APPELLATE
JUDGES ARE LIKELY TO COME OUT ON
. THIS IS IN THE PIECE THAT I
ATTACH TO MY TESTIMONY BY A
PROMINENT TAX COMMENTATOR CALLED
ROBERT GOLDER. UH, ROBERT GOLDER
IS A CONTRIBUTING EDITOR OF TAX
A TAX NOTES, AND GOLDER THINKS
THE CASE A CLOSE CALL. I WOULD
ADD TWO CONSIDERATIONS THAT
SUGGEST TO ME, IT'S NOT THAT
CLOSE. FIRST COURTS SHOULD
INTERPRET THE SCOPE OF THE IT
NARROWLY, THERE IS A PRESUMPTION
AGAINST PREEMPTION. THE IT IS A
TEXTBOOK EXAMPLE FOR WHY THIS
PRESUMPTION IS APPROPRIATE. SO
LET'S THINK ABOUT WHAT THE IFA
REALLY IS. THE I Tð FA IS
CONGRESS GRANTING A SPECIAL
FAVOR WITH NÓ POLICY MERIT TO
NARROW AND POWERFUL SPECIAL
INTERESTS, AND HERE IS THE
KICKER. IT COSTS CONGRESS
NOTHING TO DO IT BECAUSE IT'S
GIVING AWAY THE STATE'S TAX
BASE. THE IT IS THE LAW, OF
COURSE, UNLESS IT'S
UNCONSTITUTIONAL AND THERE IS A
COLORABLE ARGUMENT THAT IT'S NOT
BUT THEN THE INDUSTRY SHOULD NOT
GET ANY BENEFIT. MORE THAN
EXACTLY WHAT CONGRESS GRANTED
IT. I'M IN THE IFA. FURTHER
JUDGES ARE PEOPLE I'M TOLD. AND
THUS EVEN THOUGH JUDGES SHOULD
FOCUS ON SUBSTANCE AND NOT
LABELS, THERE IS NÓ REASON TO
MAKE THESE OBSCURE MATTERS NOT
MAKE THEM AS CLEAR AS POSSIBLE.
AND SO, PLEASE SEE THE EXAMPLE
OF A PROPOSED DIGITAL BARTER TAX
FROM TENNESSEE. THAT PROPOSAL
HAS THE MERIT OF CLEARLY
EXPLAINING IN ITS FINDINGS WHAT
IT MEANS TO DO, NAMELY TAX ON
DIGITAL BARTERS, AND I THINK
THAT WOULD MAKE, UM THE CASE A
LITTLE BIT STRONGER. TO BE SURE,
THE NEAR CERTAINTY OF LEGAL
CHALLENGES SHOULD INFLUENCE HOW
REVENUES FROM A TAX LIKE THIS
SHOULD BE BUDGETED. IT ALSO
MIGHT MAKE SENSE TO FAST TRACK
POSSIBLE LEGAL CHALLENGES. THIS
WOULD ONLY BE PRUDENT, BUT I
DON'T THINK PRUDENCE SHOULD GIVE
WAY TO ABDICATION. THE SALES TAX
IS VITALLY IMPORTANT TO THE
STATE SHY AWAY FROM A
STRAIGHTFORWARD WAY TO PLUG A
BIG HOLE BECAUSE OF THE THREAT
OF LITIGATION IS ANOTHER WAY FOR
THE POWERFUL TO ARROGATE
ADVANTAGES TO THEMSELVES BEYOND
EVEN WHAT THE LAW HAS GRANTED
THEM. I'M HAPPY TO TAKE ANY
FURTHER QUESTIONS. THANK YOU.
THANK YOU, SIR. WE'RE GOING TO
HOLD QUESTIONS UNTIL WE HEAR
FROM, UH, MR DO WELCOME TO THE
COMMITTEE AND WE LOOK FORWARD TO
YOUR TESTIMONY. THANK YOU. THANK
YOU. CHAIR FOR THE RECORD. NIKKI
DO BA UM, I AM A SHAREHOLDER
WITH GREENBERG TRAURIG. THERE
WERE ACTUALLY MISSING AN R IN
THE NAME. SO YOU YOU'RE SPELLING
ACTUALLY MAKES IT A LITTLE
EASIER TO PRONOUNCE. SO I THANK
YOU FOR THAT, BUT, UM THANK YOU
FOR HAVING ME INVITING ME HERE
TODAY TO TALK ABOUT AND I WILL
BE FOCUSING ON MARYLAND'S
EXPERIENCE WITH THE DIGITAL
ADVERTISING TAX, WHICH IS STILL
THE ONLY STATE WE HAVE TO ENACT
THIS NOVEL ONE OF A KIND,
DISCRIMINATORY TAX. UM I AM
GOING TO BE COMING AT THIS FROM
A LITTLE BIT OF A DIFFERENT
ANGLE MORE OF A PRACTICAL ANGLE.
HISTORIC ANGLE TO TELL YOU THE
TALE OF WHAT I REFER TO AS
MARILYNN'S DEBACLE. UM AND I
THINK THERE ARE MANY LESSONS
THAT CALIFORNIA CAN LEARN, UM,
FROM ITS STORY, SO BY WAY OF
BACKGROUND, UH, MARYLAND, THE
DIGITAL ADVERTISING TAX WAS
INITIALLY PASSED, UM, IN MARCH
OF 2020 BY THE MARYLAND
LEGISLATURE, THE GOVERNOR JUST A
FEW MONTHS. VETOED THAT BILL
AFTER THERE WAS ACTUALLY A
GROUNDSWELL OF GRASSROOTS
EFFORTS, AND THAT LED TO THE
VETO. ULTIMATELY WHEN THE
LEGISLATURE CAME BACK IN 2021,
THE GENERAL ASSEMBLY VOTED TO
OVERRIDE THE GOVERNOR'S VETO. A
COUPLE POINT IMPORTANT THINGS TO
NOTE THERE ABOUT THE TIMING OF
THE PASSAGE. UM THE MARYLAND
SENATE PASSED THIS BILL ON MARCH
17TH 2020. THE HOUSE PASSED IT
ON MARCH 18TH OF 2020. I DON'T
KNOW IF YOU GUYS REMEMBER WHERE
YOU WERE AT THAT TIME, BUT I WAS
IN LOCKDOWN IN MY HOUSE YOU MAY
HAVE BEEN SCATTERING AROUND HERE
. UM AND SO WHAT IS REALLY
UNFORTUNATE ABOUT MARILYNN'S
STORY IS THEY NEVER HAD THE
OPPORTUNITY TO HAVE THIS SORT OF
PUBLIC DEBATE TO DISCUSS THE
LEGAL ISSUES AND OTHER POTENTIAL
RAM. OF THIS TYPE OF TAX, AND I
THINK THAT'S VERY IMPORTANT AND
I WANT TO COMMEND YOU ALL FOR
HAVING THIS CONVERSATION
PUBLICLY AND LETTING
STAKEHOLDERS COME FORWARD AND
TALK ABOUT THE VARIOUS POSITIONS
. UM THE OTHER THING THAT IS
VERY IMPORTANT AND OFTEN GETS
BURIED IN THIS STORY IS THAT IN
FEBRUARY OF 2020 THE MARYLAND
RELEASED AN OPINION IN RESPONSE
TO THIS PROPOSAL THAT SAID,
WHILE THE DIGITAL ADVERTISING
TAX WAS NOT CLEARLY
UNCONSTITUTIONAL, AND THAT'S THE
STANDARD THAT THEY'RE REQUIRED
TO LOOK AT IT THROUGH, UM THEY
DID. THE A. G DID SAY THAT THE
PROPOSED TAX WOULD LIKELY BE
PREEMPTED BY IT. F OR THE
INTERNET FREEDOM INTERNET TAX
FREEDOM ACT, WHICH SORRY IF I GO
INTO ACRONYMS, UM SO I THINK
THOSE ARE TWO IMPORTANT POINTS
TO REALLY KEEP IN MIND THAT WE
DIDN'T HAVE. A ROBUST PUBLIC
DEBATE ON THIS TAX AND
MARYLAND'S OWN ATTORNEY GENERAL
PRIOR TO ITS PASSAGE BELIEVED
THAT IT WOULD LIKELY BE
PREEMPTED. UM SO JUST SOME FOOD
FOR THOUGHT. AS YOU MOVE FORWARD
, I'M NOT GOING TO GO INTO THE
SPECIFICS OF THE MARYLAND
DIGITAL ADVERTISING TAX. I THINK
THE BACKGROUND PAPER DOES A GOOD
JOB OF THAT. UM ONE THING I WILL
NOTE IS THAT THE LEGISLATION
LEFT OUT A KEY PIECE OF HOW THE
TAX SHOULD BE ADMINISTERED,
WHICH RELATED TO SOURCING
PROVISIONS RATHER DELEGATED THAT
TO THE MARYLAND COMPTROLLER.
I'LL TALK ABOUT THAT LATER. WHEN
I REALLY TALK ABOUT THE
PRACTICAL IMPLICATIONS OF THIS
TAX AND HOW IT HAS BEEN DEALT
WITH ON THE ADMINISTRATIVE AND
COMPLIANCE SIDE. GOING BACK TO
OUR STORY. SO UM, WE'RE BACK TO
FEBRUARY OF 2021. WE'VE HAD A
VETO OVERRIDE. LITERALLY WITHIN
DAYS, THIS TAX WAS CHALLENGED.
THERE WAS A FEDERAL LAWSUIT
BROUGHT BY THE U S¼ CHAMBER OF
COMMERCE. WITHIN JUST A FEW
WEEKS. WE HAD A STATE CHALLENGE.
DECLARATORY JUDGMENT ACTION
FILED BY A NAMED TAXPAYERS. UM
AND THESE CHALLENGES LAY OUT
SEVERAL ISSUES LEGAL ISSUES AS
TO WHY THIS TAX IS
UNCONSTITUTIONAL. I'LL JUST HIT
ON A FEW OF THE HIGHLIGHTS, UM,
SO FIRST AND FOREMOST THE
INTERNET TAX FREEDOM ACT. THIS
IS A FEDERAL LAW, WHICH IS MEANT
TO PROHIBIT THE IMPOSITION OF
MULTIPLE IN DISCRIMINATORY TAXES
ON ELECTRONIC COMMERCE. UNDER
IT, FA DISCRIMINATORY A
DISCRIMINATORY TAX IS A TAX
IMPOSED BY A STATE OR POLITICAL
SUBDIVISION ON ELECTRONIC
COMMERCE. THAT IS NOT GENERALLY
IMPOSED ON OR LEGALLY
COLLECTIBLE ON TRANSACTIONS
INVOLVING SIMILAR PROPERTY GOODS
OR SERVICES. UM IN A NUTSHELL,
IT IS MEANT TO PROHIBIT THE
IMPOSITION OF CERTAIN TAXES ON
DIGITAL PRODUCTS OR SERVICES
THAT ARE NOT ALSO IMPOSED ON
SIMILAR TRADITIONAL PRODUCTS OR
CIVIL SERVICES OR WHERE THERE IS
NÓ GENERAL TAX ON A TRADITIONAL,
UM, SERVICE AND COMMERCE. UM TO
MY MIND, THE MARYLAND DIGITAL
ADVERTISING TAX IS THE
QUINTESSENTIAL DISCRIMINATORY
TAX. UM MARYLAND DOES NOT
OTHERWISE TAX ADVERTISING AND
TAXING IT IN ITS DIGITAL FORM AS
THE MARYLAND TAX DOES. UM UH, IS
A VIOLATION OF IT, F AND IS
PREEMPTED. WITH RESPECT TO THE
COMMERCE CLAUSE. THERE'S REALLY
TWO PIECES OF THE COMMERCE
CLAUSE THAT I THINK ARE
IMPORTANT FOR YOU ALL TO FOCUS
ON. UM UH, OUR COMMERCE CLAUSE,
OF COURSE, HAS A FOREIGN
COMMERCE CLAUSE ASPECT AS WELL
AS THE DOMESTIC COMMERCE CLAUSE
ASPECT AND THE MARYLAND DIGITAL
ADVERTISING TAX VIOLATES BOTH
UNDER THE DOMESTIC COMMERCE
CLAUSE. PROVISION MARYLAND
CLEARLY DISCRIMINATES AGAINST
INTERSTATE COMMERCE BOTH IN
PURPOSE AND EFFECT. IF YOU LOOK
AT THE COMPANY TO WHICH ARE
SUBJECT TO THE TAX AS WELL AS
THE RATE THAT GETS IMPOSED, IT
LOOKS AT A GLOBAL REVENUE NUMBER
. IT DOES NOT LOOK AT MARYLAND
DIGITAL ADVERTISING REVENUE
SPECIFICALLY, BUT RATHER WHAT
THAT COMPANY EARNS GLOBALLY, UH
OR THEIR RECEIPTS GLOBALLY. AND
THEN THERE WAS ALSO VERY
SPECIFIC LEGISLATIVE HISTORY. IN
MARYLAND, UM, THAT THIS TAX WAS
MEANT TO BE IMPOSED ON A HANDFUL
10 TO 12 SPECIFIC COMPANIES,
NONE OF WHICH WERE MARYLAND
BASED COMPANIES. SO CLEARLY
THERE WAS A DISCRIMINATORY
INTENT. UM, WHEN IT WAS PASSED I
BELIEVE THERE ARE OTHER
ARGUMENTS UNDER THE COMMERCE
CLAUSE THAT ARE IMPACTED HERE,
BUT I WON'T GET INTO THOSE, UM,
WITH RESPECT TO THE FOREIGN
COMMERCE CLAUSE. THIS IS A KEY
PIECE WITH THAT. THAT UM, THAT
MARYLAND HITS ON AND REALLY, UH,
MARILYN RUNS AFOUL OF THIS, UH,
THIS PIECE OF THE FEDERAL
COMMERCE CLAUSE THAT REALLY
PREVENTS THE FEDERAL GOVERNMENT
FROM SPEAKING WITH ONE VOICE
WHEN REGULATING COMMERCIAL
RELATIONS WITH FOREIGN
GOVERNMENTS. IT'S IMPORTANT TO
NOTE THAT THE FEDERAL GOVERNMENT
HAS BEEN STRONGLY OPPOSED TO THE
IMPOSITION OF NATIONAL LEVEL
DIGITAL SERVICES TAXES ABROAD,
UM, STARTING BACK IN 2019, THE U
S¼ TRADE REPRESENTATIVE,
INVESTIGATED AND THREATENED TO
IMPOSE TRADE SANCTIONS ON
VARIOUS COUNTRIES IMPOSING
DIGITAL SERVICES TAX. THERE'S
WORK AT THE Ó E èC Dð UNDER
PILLAR ONE WITH THE AIM TO
CREATE GLOBAL CONSENSUS ON NEXUS
ISSUES AND TAXATION OF DIGITAL
SERVICES IN ORDER TO ELIMINATE
THE NEED FOR THESE DIGITAL
SERVICES TAXES IN OTHER
COUNTRIES. UM THE THIS IS A
BROADER CONVERSATION. I'M HAPPY
TO GET INTO IT LATER. BUT THE
REASONS THAT FOREIGN COUNTRIES
HAVE DEVELOPED THESE DIGITAL
SERVICES TAXES DO NOT, UH, EXIST
AT THE STATE. ALL FOREIGN
NATIONS. THEY DON'T HAVE
ECONOMIC NEXUS RULES. THERE'S
PHYSICAL PRESENCE STANDARDS,
THEY STILL RELY ON SOURCING
PROVISIONS RELATED TO COST OF
PERFORMANCE AND INCOME PRODUCING
ACTIVITY. AT THE STATE LEVEL. WE
HAVE ECONOMIC NEXUS, AND WE ALSO
HAVE MARKET BASED SOURCING, SO
WE'VE ADDRESSED THOSE ISSUES AT
THE STATE LEVEL. UM AND SO
PILLAR ONE REALLY SEEKS TO
SMOOTH THIS OUT GLOBALLY, AND
MARYLAND HAS ACTUALLY DRAWN THE
IRE OF THOSE COUNTRIES THAT HAVE
REALLY COME TO THE TABLE TO GET
RID OF THEIR OWN DIGITAL
SERVICES TAXES DUE TO THE U S¼
GOVERNMENT, REALLY PUSHING THEM,
AND NOW WE HAVE A U S¼ STATE
THAT IS ENACTED SOMETHING VERY
SIMILAR. SO UM, DEFINITELY
ISSUES THERE. UM TO BE AWARE OF.
THERE ARE ALSO FIRST AMENDMENT
ISSUES DUE PROCESS ISSUES, EQUAL
PROTECTION ISSUES, AND THEN WITH
RESPECT TO MARYLAND, THERE ARE
OTHER MARYLAND SPECIFIC LAWS
THAT THAT ARE BEING ADDRESSED.
UM SO THE SO THAT'S THE BASIS
FOR THE LEGAL CHALLENGE. I ALSO
DO WANT YOU TO UNDERSTAND THE
SHEER MAGNITUDE OF THE
LITIGATION IN MARYLAND, BECAUSE
I THINK THAT IS IMPORTANT. AS AS
YOU THINK. THROUGH THESE ISSUES.
UM AGAIN, THERE WAS FEDERAL
LITIGATION. THAT WAS FILED, UM,
ALMOST IMMEDIATELY AFTER THE
VETO OVERRIDE IN, UM IN FEBRUARY
OF 2021. THE DISTRICT COURT DID
DISMISS THAT CASE UNDER THE TAX
INJUNCTION ACT. THE FOURTH
CIRCUIT REVIVED THAT CASE AS IT
RELATES TO THE FIRST AMENDMENT.
SO THAT ISSUE IS CURRENTLY
PENDING BEFORE THE DISTRICT
COURT THE CAPES THE CASE WAS
SENT BACK DOWN. UM, AND I
BELIEVE THAT LITIGATION WILL GO
ON. FOR YEARS WITH RESPECT TO
THE TAX INJUNCTION ACT AND
WHETHER OR NOT THE DISTRICT
COURT THE FEDERAL COURT IS, IN
FACT BARRED, SO, UM, THAT WILL
BE ONGOING FOR SOME TIME. AT THE
STATE LEVEL. UM WE HAD THE
DECLARATORY JUDGMENT ACTION THAT
WAS ALSO FILED ALMOST
IMMEDIATELY. THIS IS THE CASE IN
WHICH THE MARYLAND CIRCUIT COURT
DID, IN FACT STRIKE DOWN THE
MARYLAND DIGITAL ADVERTISING TAX
AS BEING PREEMPTED BY IT AND IN
VIOLATION OF THE COMMERCE CLAUSE
. IN MAY OF 2020 THREE, THE
MARYLAND SUPREME COURT DID
REVERSE THAT RULING AND REMANDED
THE CASE WITH TO DISMISS THAT,
HOWEVER, WAS PURELY PROCEDURAL.
UM THERE, THE SUPREME COURT SAID
THAT THE TAXPAYERS DID NOT
EXHAUST THEIR ADMINISTRATIVE
REMEDIES AND THAT IT DECLARATORY
JUDGMENT. ACTION WAS NOT PRUDENT
. UM SO WHERE ARE WE AT NOW? WE
ARE STILL DEALING WITH A
BOATLOAD OF LITIGATION. THE
MARYLAND TAX COURT IS CURRENTLY
HAS SEVERAL CASES THAT HAVE BEEN
FILED. APPLE WAS THE FIRST TO
FILE SUIT. UM AND THIS, UH,
THERE WAS ADDITIONAL CHALLENGES.
PROCEDURAL CHALLENGES PUT FORTH
BY THE COMPTROLLER. UM SEEKING
TO HAVE THIS TAXPAYER GO THROUGH
A FULL BLOWN AUDIT? UM, THE TAX
COURT REJECTED THAT AND HAS
AGREED TO TAKE UP THE
SUBSTANTIVE CONSTITUTIONAL
ISSUES IN THAT CASE, BUT WE HAVE
SEVERAL OTHER HANDFUL OF THOSE
THINGS, UH, OF THESE CASES GOING
ON, UM IT. ONE THING I DO HAVE A
FEW MORE POINTS I WOULD LIKE TO
MAKE AND I SEE MY TIME IS SHORT.
UM I WILL SAY WHEN IT COMES TO
ADMINISTRATION, THE THERE HAS
NOT BEEN A LOT OF FOCUS ON THE
ADMINISTRATION OF THIS TAX. THE
COMPTROLLER HAS ADOPTED RULES
WITH RESPECT TO SOURCING THE BUT
THEY HAVE NOT. THERE'S BEEN NÓ
TAXPAYER THAT HAS BEEN AUDITED.
THE SOURCING RULES ARE VAGUE AT
BEST, AND, UM, WE'RE REALLY
EMBROILED IN THIS LITIGATION.
BECAUSE I TO THIS POINT, WHY
WOULD YOU PUT A LOT OF RESOURCES
INTO ADMINISTRATION IF
ULTIMATELY IT'S GOING TO BE
OVERRULED. UM AND FINALLY, I
WOULD LIKE TO RESPOND TO THIS,
UH, THE NOTION THAT THIS IS NOT
TAXED UNDER THE CORPORATE INCOME
TAX. UM TO THE EXTENT THESE
RECEIPTS ARE IN THE TAXABLE BASE
AND THE BENEFIT OF THE SERVICE,
WHICH IS YOUR MARKET BASED
SOURCING ROLE, UM, IS IN
CALIFORNIA. THIS REVENUE IS
TAXED. AND UM, CALIFORNIA DOES
HAVE THE ABILITY FOR TAXPAYERS
TO FILE ON A WORLDWIDE BASIS. UM
TO THE EXTENT THERE IS A PRODUCT
SOLD OR A SERVICE SOLD THAT IS
TAXABLE IN CALIFORNIA UNDER THE
SALES TAX THAT WAS SOLD DUE TO
THIS ADVERTISING, THAT PRODUCT
IS SUBJECT TO SALES TAX. THERE
ARE OTHER WAYS TO ADDRESS GAPS
IN THE CONSUMPTION TAX. I DO NOT
THINK YOU NEED A NEW TAX TO DO
THAT. UM AND THEN, FINALLY, THE
IMPOSITION OF A GROCER. PEACE
TAX ON ADVERTISING, WHICH IS A
BUSINESS INPUT RUNS CONTRARY TO
SOUND TAX POLICY, AS IT APPLIES
TO CONSUMPTION TAXES. SO UM, I
WOULD WELCOME ANY COMMENTS, BUT
I THINK THERE'S A LOT OF
UNCERTAINTY HERE. AND I THINK IF
CALIFORNIA WANTS TO ADDRESS A
PROBLEM, UM I WOULD LOOK FOR
DOLLARS THAT ARE MUCH MORE
RELIABLE, AND I JUST DON'T SEE
THIS AS A RELIABLE SOURCE OF
REVENUE FOR THE STATE. THANK
YOU. THANK YOU. WE APPRECIATE
YOUR EXPERTISE AND THAN
PROVIDING GREAT DETAIL. THEY
ADVENTUROUS IN MARYLAND, UM LET
ME NOW GO BACK TO PROFESSOR
SHANKS, UH, TO ASK THIS QUESTION
THAT SO YOU'VE HEARD THE AND YOU
I KNOW YOU WERE AWARE AND READ
THE ADVENTURES THERE IF YOU WERE
CRAFTING AN ADVERTISING TAX HERE
IN CALIFORNIA, GIVEN THE
EXPERIENCE THAT YOU KNOW ABOUT,
UH WHAT MIGHT YOU DO THE SAME OR
DIFFERENT? GREAT UM, THANK YOU
FOR THE QUESTION. SO NUMBER ONE.
AS I EXPLAINED, I WOULD HAVE
CLEAR FINDINGS, EXPLAINING THAT
THIS IS A DIGITAL BARTER TAX. IT
IS A TAX ON THE BARTER, AND THAT
IS WHAT MAKES THESE TRANSACTIONS
DIFFERENT FROM TRADITIONAL AD SO
I WOULD EXPLAIN CLEARLY TO A
COURT. WHAT'S BEING DONE? UM
WOULDN'T HAVE A PROVISION ABOUT
PASSING ON PROHIBITING PASSING
ON THE TAX THAT JUST EMBROILED
MARYLAND AND I THINK NEEDLESS
FIRST AMENDMENT LITIGATION, SO
THERE'S JUST NÓ REASON. REALLY,
TO HAVE A RULE LIKE THAT, UM I
THINK THAT THE DORMANT COMMERCE
CLAUSE CHALLENGE TO MARYLAND'S,
UM USE OF GLOBAL GROSS RECEIPTS
IS BASICALLY MERITLESS. I REFER
YOU TO GOER'S POINT ABOUT THAT
BECAUSE MARYLAND IS NOT ACTUALLY
TAXING GLOBAL RECEIPTS. MARYLAND
IS TREATING THE VALUE OF
RECEIPTS IN MARYLAND AS WORTH
MORE IF THE NETWORK IS WORTH
MORE, AND THAT IS A WELL
ESTABLISHED THING THAT STATES DO
ALL THE TIME UNDER THE UNDER
INCOME TAX PRINCIPLES.
NEVERTHELESS, AS WE SAW IN THE
PRECEDING PRESENT THERE IS NÓ
REASON TO DO THAT. CALIFORNIA
CAN SIMPLY UM, USE THE SIZE OF
THE GROSS RECEIPTS IN CALIFORNIA
AS A THRESHOLD, SO THERE'S NÓ
REASON TO USE GLOBAL RECEIPTS
AND GET EM BROILED IN THAT ISSUE
. UM AND SO THAT WOULD BE IT,
MAKING IT CLEAR THAT THIS IS A
TAX ON, UM THE UNTAXED BARTER.
THAT IS A COMPLIMENT TO THE
SALES TAX. DON'T GET INVOLVED IN
FIRST AMENDMENT STUFF AND USE A
CALIFORNIA UM, RECEIPTS
THRESHOLD, WOULD YOU WOULD YOU
CONSIDER THE UNTAXED BARTER OF
ELEMENTS TO BE A LOOPHOLE IN THE
TAX LAW TODAY? I THINK THAT
WOULD BE A FAIR CHARACTERIZATION
. I MEAN, A LOT OF LOOPHOLES ARE
CREATED, AND TO SOME EXTENT THIS
ONE'S CREATED. I MEAN TO THE
EXTENT THAT IT WAS IN THE WAY,
BUT MOSTLY, THIS IS JUST A
FACTOR OF OUR SALES TAX WAS PUT
INTO PLACE IN THE 19 THIRTIES.
UM, IT SIMPLY WASN'T DESIGNED TO
TAKE THESE KINDS OF TRANSACTIONS
INTO ACCOUNT. BUT TO THE EXTENT
THAT A LARGER AND LARGER PORTION
OF THE CONSUMPTION TAX OF WHAT
WE CONSUME, UM IS THROUGH THE SO
CALLED FREE SERVICES WE NEED TO
MODERNIZE THE CONSUMPTION. TAX
SO YOU CAN CALL IT A LOOPHOLE OR
MODERNIZING. I THINK THAT WOULD
BOTH BE FAIR. GREAT. THANK YOU.
AND, UM ONE OF THE
VULNERABILITIES OF THE MARYLAND
TAX IS THE INTERNET TAX FREEDOM
ACT THAT IT'S DISCRIMINATORY IF
YOU HAD TO WRITE IT AGAIN, OR TO
WRITE IT IN CALIFORNIA WAS THE
MISTAKE THAT THEY MADE THAT THEY
CALLED IT A DIGITAL AD TAX
VERSUS JUST AN AD TAX THAT
APPLIES TO EVERYONE ABOVE A
CERTAIN THRESHOLD. ISN'T THAT
ONE OF THE POTENTIAL REMEDIES
THERE THAT, UH HE SET A HIGH
THRESHOLD. AND IT'S AND IT'S
APPLICABLE TO ANYBODY WHO
ADVERTISES, BUT WE ALL NOW KNOW
THE DATA. ON UH ON, UH, WHERE
THE SPENDING IS. IS THAT ONE WAY
TO AVOID THAT VULNERABILITY?
GREAT POINT. SO, SO FIRST I
SHOULD JUST, UM, NOW, THE
CHALLENGE THE QUESTION. I THINK
MARYLAND TAX IS GONNA DO JUST
FINE. UM THERE'S IT'S EASY,
ESPECIALLY YOU HAVE LOTS OF
RESOURCES TO CREATE A LOT OF
LITIGATION. UM, AND WE JUST
HEARD ABOUT A LOT OF LOSING. AND
I THINK EVENTUALLY THOUGH, I, I
I'M I CAN'T MAKE UM CERTAIN
PREDICTIONS, AND I THINK
THERE'LL BE A BUMPY ROAD AND
THEY'LL BE, UM MULTIPLE LEVELS
OF DECISIONS. I AM NOT AT ALL
CERTAIN THAT MARILYN WILL NOT
SUCCEED. BUT YOUR QUESTION IS,
HOW COULD YOU MAKE IT EASIER IF
YOU HAD A TAX ON ALL ADS WITH
GROSS RECEIPTS OVER A CERTAIN
THRESHOLD? YEAH, THERE'S NÓ.
THERE'S NOT EVEN A PLAUSIBLE
ARGUMENT OF DISCRIMINATION THERE
BECAUSE YOU'RE JUST TAXING
LARGER TAXPAYERS. AND THERE ARE
LOTS AND LOTS OF EXAMPLES IN THE
TAX LAW, WHERE WE ONLY IMPOSE
TAXES ON TAXPAYERS ABOVE A
CERTAIN THRESHOLD. MR BAY. DO
YOU WANT TO RESPOND? I WANT TO
GIVE YOU A CHANCE AN OPPORTUNITY
THERE, TOO, AND THEN I'M GONNA
GO TO MY COLLEAGUES FOR ANY
FURTHER QUESTIONS THEY MAY HAVE
MY RESPONSE. THANK YOU FOR THE
CHANCE TO RESPOND TO MY MIND ANY
TIME THERE'S A TAX THAT TARGETS
ONE SPECIFIC INDUSTRY IS ALWAYS
GOING TO BE DISCRIMINATORY. AND
SO I THINK IT'S ALWAYS BETTER TO
LOOK THROUGH THINGS. LOOK AT THE
TAX LAW THROUGH A BROADER LENS
AND MAYBE ADDRESS THINGS LIKE,
UH, HOLES OR MODERNIZING THE
CONSUMPTION TAX AS A WHOLE, SO I
WON'T DISAGREE WITH THAT. BUT TO
ME, UM, I THINK YOU GET RID OF
THE LIKELIHOOD OF INTERNET TAX
FREEDOM ACT CHALLENGE POPPING UP
A FEW TAX ALL ADVERTISING. UM,
BUT THAT IS STILL DISCRIMINATING
AGAINST ONE SPECIFIC INDUSTRY.
BUT IS THERE IS THERE SOMETHING
INHERENT ABOUT IDENTIFYING THE
YOU KNOW THE HUGE WINNERS IN
THAT SPACE? WHAT WHATEVER THEY
WHEREVER THAT COMES FROM WHAT?
WHAT WHAT IS WHAT IS WRONG WITH
THAT? YOU CAN SAY WELL, I JUST
DON'T LIKE TAXES. BUT IF ONE
IDENTIFIES AND WE DO WE HAVE A
PROGRESSIVE TAX CODE IN
CALIFORNIA. SO CERTAINLY IT'S
PART OF OUR PRACTICE TO IDENTIFY
THOSE WHO ARE MORE AFFLUENT TO
PAY A GREATER SHARE OF THEIR OF
THEIR REVENUE IN THAT WAY, SO
FROM MY PERSPECTIVE, I WOULD
RATHER SEE YOU ALL LOOK AT THIS
THROUGH THE LENS OF THE TAXES
YOU ALREADY HAVE AND HOW TO
ADDRESS ISSUES THAT YOU
POTENTIALLY SEE WITH THOSE TAXES
, WHETHER IT BE SOURCING WITHIN
THE CORPORATE INCOME TAX AS IT
RELATES TO THESE TYPES OF
RECEIPTS OR CHANGES TO THE SALES
TAX CODE AS IT RELATES TO, YOU
KNOW. MODERNIZATION AND THAT
CODE BEING ADOPTED MANY MANY
YEARS AGO. PRENE I THINK THAT'S
A BETTER USE OF TIME AND
RESOURCES AND SIMPLY MORE FAIR
AND WILL PROVIDE MORE STABILITY
IN CALIFORNIA'S REVENUE OVERALL.
TERRIFIC WELL, THANK YOU FOR
YOUR INPUT. I WANT TO GO TO MY
COLLEAGUES AND ANY QUESTIONS
FROM MY COLLEAGUES HERE. YEAH
NOT REALLY. I'M NOT REALLY A
QUESTION. AND I KNOW THAT I
TALKED WITH THE CHAIR BEFORE THE
HEARING. BUT NOW WE'RE I
REPRESENT 15 COUNTIES. EVERY
LITTLE TOWN HAD A PAPER WHEN I
CAME HERE 12 YEARS AGO, AND
THEY'RE ALL GONE. EXCEPT FOR
MAYBE A FEW. BUT I MEAN, I KNOW
THAT THE GOAL OF THIS PART OF
THE HEARING IS TO TALK ABOUT.
YOU KNOW HOW WE GAIN REVENUE AND
DO A TAX CREDIT EVENTUALLY, BUT
THERE'S A LOT OF ANGST OUT THERE
, AND THIS IS JUST A COMMENT. I
MEAN, PEOPLE ARE USING MY
INFORMATION. EVERY DAY AND
SELLING IT AND PROFITING OFF OF
IT AND COLLECTING IT BECAUSE I
THAT'S THE PLATFORM. I CHOOSE TO
GET ON. IT'S VERY FRUSTRATING TO
ME AT THE SAME TIME. THEY'RE
MARKETING TO ME WHEN I DON'T
WANT TO BE MARKETED TO UM, AND
SO I THINK THAT IN MY
CONVERSATIONS WITH THE CHAIR AND
STARTING TO HAVE THIS DIALOGUE,
AND I THINK WE SHOULD HAVE THIS
DIALOGUE, BUT I THINK I THINK
IT'S IMPORTANT TO KNOW THAT
THERE ARE HUGE BIG CORPORATIONS
AT THE SAME TIME, WHEN I RAN FOR
GOVERNOR, THEY WERE THROTTLING
MY ABILITY TO BE ABLE TO SPEAK
FREELY. AND SO I THINK THERE'S A
LOT OF FRUSTRATION. UM IN THE
WITH MY CONSTITUENTS AND WITH
PEOPLE THAT ARE ARE OUR OUR
FIRST AMENDMENT RIGHTS ARE BEING
TAKEN. PEOPLE SHOULD BE ABLE TO
SAY WHATEVER THEY WANT TO SAY
YOU. EVEN THOUGH WE DISAGREE
WITH IT, THERE'S STILL OUGHT TO
BE A PLATFORM THAT YOU CAN SAY
WHAT YOU WANT TO SAY. AND THAT'S
BEEN THE CORNERSTONE OF AMERICA
THAT WE, WHICH WAS WHAT THE
CHAIR CAME OUT WITH WAS SAYING.
YOU KNOW WE HAD FREEDOM OF
SPEECH, AND IT'S ACTUALLY IN THE
CONSTITUTION AND THE PRESS WAS
PART OF THAT, AND IT HAS
CHANGED. THERE'S NÓ DOUBT ABOUT
IT THAT WE HAVE SEEN IT CHANGE.
UM DRAMATICALLY. SO I. I DON'T
KNOW HOW WE GET WHERE WE'RE
TRYING. AND THIS IS A VERY, UH
NÓ FRAUD HEARING WHERE WE'RE
TALKING ABOUT HOW WE MAYBE TRY
TO YOU HAVE A TAX CREDIT TO
SOMEBODY SO THEY CAN STAY IN
BUSINESS BECAUSE THE MARKET IS
JUST QUITE FRANKLY, AND
TECHNOLOGY HAS CHANGED. AND SO
THAT'S THAT'S THE DIFFICULT PART
OF THIS HEARING FOR ME IS TO
FIGURE OUT HOW WE THREAD THAT AT
THE SAME TIME. UH, YOU KNOW,
WE'RE PICKING WINNERS AND LOSERS
AT THE AT THE TABLE. THANK YOU,
SENATOR DOLLY FOR YOUR
THOUGHTFUL WORDS AND, UH,
PERSPECTIVE. I WILL NOTE FOR THE
RECORD THAT WE DID INVITE
REPRESENTATIVES OF THE THREE
LARGEST PLATFORMS TO PARTICIPATE
IN THIS HEARING TODAY. THEY MAY
STILL TESTIFY IN PUBLIC COMMENT,
SO I DON'T WANT TO TELL THAT
THEY MAY NOT WANNA. THEY MAY
STILL BE WANTING TO COME UP AND
SHARE THEIR THOUGHTS. BUT I DID
WANT TO GIVE THEM AN OPPORTUNITY
AND UP UNTIL NOW, THEY THEY HAVE
DECLINED. I HOPE THAT THEY WILL
PARTICIPATE IN THIS CONVERSATION
IRRESPECTIVE OF WHETHER THERE'S
A BILL OR NOT, BECAUSE THEY DONE
WELL, AND I THINK THEY BEAR SOME
RESPONSIBILITY TO REPAIR THE
FABRIC THAT, UH HAS BEEN A
CONSEQUENCE OF THEIR SUCCESS. SO
WITH THAT WITHOUT ANY FURTHER
QUESTIONS, I WANT TO THANK BOTH
OF YOU FOR SHARING YOUR
EXPERTISE WITH US TODAY. WE'RE
GONNA MOVE ON TO OUR THIRD PANEL
, AND WE HAVE TWO OTHER
INDIVIDUALS THAT HAVE EXPERTISE
IN THIS SPACE. THAT UH, THAT WE
WILL TAKE ADVANTAGE OF THE FIRST
IS STEVE WALDMAN. UH, STEVE IS
THE FOUNDER AND PRESIDENT OF
REBUILD LOCAL NEWS. IS ALSO THE
CO FOUNDER AND FORMER PRESIDENT
OF REPORT FOR AMERICA, A
NATIONAL SERVICE PROGRAM THAT
PLACES JOURNALISTS IN NEWSROOMS
ACROSS AMERICA. UM THAT'S A
CLOSE TO MY HEART AS HE KNOWS
BEFORE BECOMING AN ADVOCATE FOR
A LOCAL JOURNALISM, MR WALDMAN
WAS A JOURNALIST COVERING
NATIONAL POLITICS FOR NEWSWEEK,
U S¼ NEWS AND WORLD REPORT AND
THE WASHINGTON MONTHLY I. LATER
HE WROTE A REPORT FOR THE
FEDERAL COMMUNICATIONS
COMMISSION OUTLINING THE
INFORMATION NEEDS OF
COMMUNITIES. WE ALSO WANT TO
INVITE TO THE TABLE HERE. UH,
MATT PIERCE. MATT IS PRESIDENT
OF THE MEDIA GUILD OF THE WEST,
A JOURNALISM ADVOCATE A LONG
TIME REPORTER FOR THE LOS
ANGELES TIMES. IT'S GOOD TO HAVE
BOTH OF YOU HERE. THANK YOU FOR
TRAVELING HERE. UH, AND FOR
SHARING YOUR THOUGHTS, WE'LL
BEGIN WITH MR WALDMAN. THANK YOU
SO MUCH FOR HAVING THIS HEARING.
UM I AM THE PRESIDENT OF THE
REBUILD LOCAL NEWS AND THE CHAIR
OF THE REBUILD LOCAL NEWS
COALITION, WHICH IS AN ALLIANCE
OF MORE THAN 35 DIFFERENT
NATIONAL STATE ORGANIZATIONS
THAT REPRESENT TOGETHER ABOUT
THREE 1000 NEWSROOMS. LABOR
UNIONS, ETHNIC MEDIA,
CONSERVATIVE RURAL WEEKLIES FOR
PROFITS, NONPROFITS. IT'S A VERY
BROAD COALITION, AND OUR GOAL IS
TO FIND AND ADVOCATE FOR PUBLIC
POLICIES THAT WILL COUNTER THIS
COLLAPSE OF LOCAL NEWS WHILE
PRESERVING EDITORIAL
INDEPENDENCE THAT A KEY. POINT
UH, AS YOU NOTED, UH, THE CRISIS
IS REALLY SEVERE. THERE'S NEW
INFORMATION FROM THE MEDILL
UNIVERSITY'S MOST RECENT REPORT
THAT THERE HAS BEEN A 68% DROP
IN THE NUMBER OF JOURNALISTS IN
CALIFORNIA FROM 2005 TO 2000.
IT'S REALLY STAGGERING IN 100
AND 60 NEWSPAPERS HAVING CLOSED
IN CALIFORNIA. SO REALLY, THANK
YOU, SENATOR GLAZER FOR YOUR
FOCUS ON ON THIS THROUGH THE
FELLOWSHIP PROGRAM IN GENERAL,
AND I ALSO WANT TO THANK FAMILY
MEMBER WICKS AND SENATOR UM
BURKE, AS WELL AS THE CALIFORNIA
NEWS PUBLISHERS ASSOCIATION AND
THE NEWS MEDIA ALLIANCE FOR
THEIR WORK ON THE CON. THE
CALIFORNIA JOURNALISM
PRESERVATION ACT, AND I THINK
THEIR EFFORTS HAVE BROUGHT A
GREAT DEAL OF ENERGY TO HELPING
SOLVE THIS, CAUSE. I'M HERE TO
DESCRIBE. OTHER COMPLEMENTARY
APPROACHES THAT YOU MIGHT
CONSIDER AS WELL THAT ARE BASED
IN TAX POLICY. AND HAVING
STUDIED A VARIETY OF DIFFERENT
APPROACHES. THERE IS ONE CLEAR
WINNER AT LEAST IN TERMS OF THE
BREADTH OF SUPPORT, AND THAT IS
THE IDEA OF A LOCAL NEWS
EMPLOYMENT TAX CREDIT. A VERSION
OF THIS PAST. UH, THE U S¼ HOUSE
OF REPRESENTATIVES IN 2021. IT'S
BEEN ENDORSED BY EVERY MAJOR
PUBLISHER GROUP LABOR UNIONS,
THE STATE PRESS ASSOCIATIONS. UM
AND MANY OTHERS AND THE FEDERAL
VERSION THE WAY IT WORKS IS THEY
USE THE PAYROLL TAX REFUND
SYSTEM. AS A WAY OF PROVIDING
SUBSIDIES TO LOCAL NEWSROOMS,
BASED ON HOW MANY EDITORIAL
EMPLOYEES THAT THEY HAVE WORKING
ON LOCAL NEWS. SO THE SUBSIDY IN
THAT CASE IS EQUIVALENT TO 50%
OF THE REPORTERS WAGE. TO
$50,000 SALARY, SO IN OTHER
WORDS, IT COULD PROVIDE
ORGANIZATIONS WITH UP TO A
$25,000 BENEFIT PER EMPLOYEE.
SO, FOR EXAMPLE, HERE IN
SACRAMENTO, YOU'RE LUCKY ENOUGH
TO HAVE THE SACRAMENTO OBSERVER,
WHICH DOES AN OUTSTANDING JOB
COVERING THE BLACK COMMUNITY
HERE. THEY HAVE EIGHT EDITORIAL
STAFF AND THEY WOULD GET
$190,000 IN IN THE FIRST YEAR
AND LARRY LEE, THE PUBLISHER
TELLS ME THAT THAT WOULD ENABLE
THEM TO HIRE MORE REPORTERS AND
HAVE MORE EVENTS IN THE
COMMUNITY. IN THE FEDERAL
VERSION, I'D NOTE THAT IT'S
SUNSET AFTER FIVE YEARS AND THAT
THE BENEFIT DROPS FROM MAXIMUM
OF 25,000 TO 15,000 IN YEARS,
TWO THROUGH FIVE. YOU MIGHT WANT
TO CONSIDER A CALIFORNIA TWIST
ON THIS, WHICH WOULD BE TO
MAINTAIN THE HIGHER LEVEL IF THE
NEWSROOM MAINTAINS, OR INCREASES
THEIR STAFF SORT OF TAKING A
PAGE FROM PP AND CREATING THOSE
INCENTIVES. THERE'S A LOT TO
LIKE ABOUT THIS APPROACH. IT'S
HIGHLY TARGETED TO THE COURT
CHALLENGE. THE LACK OF LOCAL
REPORTING IN COMMUNITIES. IT HAS
GOOD INCENTIVES. IF A NEWSROOM,
ADDS REPORTERS, THEY GET A
LARGER BENEFIT. IF THEY CUT
STAFF, THEY GET A SMALLER
BENEFIT. IT'S EASILY ACCESSIBLE
BY SMALLER NEWSROOMS. THEY DON'T
HAVE TO HIRE A GRANT WRITER OR A
LOBBYIST. IF THE OUTLET
QUALIFIES. IT FILES FOR IT ON
ITS TAXES, AND THE NEXT QUARTER,
IT GETS A REFUND. WE THINK THIS
WOULD BE ENORMOUS BENEFIT,
ESPECIALLY TO SMALL RURAL
WEEKLIES. UH FAMILY OWNED
PUBLICATIONS, ETHNIC MEDIA, NON
AND NONPROFITS AS WELL AS THE
BIGGER PLAYERS. ITS FUTURE
FRIENDLY, WHICH IS TO SAY THAT
IT DOESN'T ONLY HELP THE CURRENT
ESTABLISHED PLAYERS AS NEW
MODELS EMERGE AS THEY WILL. THEY
CAN BENEFIT TOO AS LONG AS THEY
MEET THE BASIC CRITERIA. CAÑADA
HAS A SIMILAR POLICY IN EFFECT
FOR A COUPLE OF YEARS. NOW THEY
CALL IT THE LABOR SUBSIDY, AND
THE EARLY REPORTS ARE
ENCOURAGING, A STUDY BY THE
UNIVERSITY OF NORTH CAROLINA
FOUND THAT ALL OF THE SMALL
PUBLISHERS THAT THEY INTERVIEWED
REPORTED THAT THE CREDIT HAD
INCREASED THEIR ABILITY TO HIRE
REPORTERS. SO WHAT WOULD THIS
COST NOW? OUR ESTIMATED IF YOU
USE THE TERMS THAT ARE IN THE
FEDERAL BILL WHICH WE THINK
WOULD HELP ABOUT 450, CALIFORNIA
NEWSROOMS WITH ABOUT 3000
REPORTERS USING THE MODEL THAT
THE JOINT TAX COMMITTEE CREATED
IT WOULD COME OUT TO ABOUT 55 TO
$60 MILLION COST PER YEAR FOR
CALIFORNIA TO IMPLEMENT THIS. WE
ARE AGNOSTIC ON EXACTLY HOW TO
PAY FOR THIS. I WOULD NOTE THAT
AS A MATTER OF SCALE BASED ON Kò
X TESTIMONY A TAX OF 0.5% ON ON
THE THREE COMPANIES WOULD PAY
FOR THE ENTIRE EMPLOYMENT CREDIT
TAX PROGRAM. BUT EVEN WITHOUT A
PAY FOR I HOPE LAWMAKERS
SERIOUSLY CONSIDER THIS BECAUSE
THE THERE'S ENORMOUS CIVIC
BENEFITS TO HAVING HEALTHY LOCAL
NEWS, WHICH I THINK MATT PIERCE
WILL TALK ABOUT A LITTLE BIT,
AND I WOULD ADD JUST ONE OTHER
THING THAT IS EVEN MORE
PEDESTRIAN IS THAT LOCAL
JOURNALISM ROUTINELY SAVES
GOVERNMENTS AND CONSUMERS
BILLIONS OF DOLLARS. WHETHER
IT'S UNCOVERING WASTE IN
GOVERNMENT OR HIGHLIGHTING, YOU
KNOW, CORPORATE SCAMS AGAINST
CONSUMERS OR EVIDENCE OF
MALFEASANCE THAT THE ATTORNEY
GENERAL THEN USES TO COLLECT
FINES. SO A SOCIAL SOCIAL LEVEL,
BROADLY SPEAKING, OFFERING A TAX
CREDIT FOR LOCAL NEWS EMPLOYMENT
WILL LIKELY PAY FOR ITSELF. ONE
THING THIS APPROACH DOES NOT DO
IS ATTEMPT TO POLICE BASED ON
THE QUALITY. OF THE NEWSROOM OR
THE IDEOLOGY. SOME TAX BENEFITS
WOULD THEREFORE NÓ DOUBT END UP
SUPPORTING PUBLICATIONS OR Tð VÆ
STATIONS THAT WE MIGHT LIKE
INDIVIDUALLY, BUT WE BELIEVE
THAT THAT KIND OF BROAD MINDED
APPROACH IS THE WAY TO PROVIDE
THE SUPPORT WHILE PRESERVING
EDITORIAL INDEPENDENCE, AND
INSTEAD OF THE NEWSROOMS,
COLLAPSING AND CLOSING, THEY
WOULD HAVE A REAL SHOT AT
COVERING THEIR COMMUNITIES. NOW
FROM THERE, THEY STILL HAVE TO
MAKE THE CASE TO THEIR RESIDENCE
THAT THEY'RE SERVING THEM WELL.
A FEW OTHER TAX IDEAS THAT I'LL
MENTION QUICKLY. THE FEDERAL
BILL ALSO INCLUDES A SECOND IDEA
, WHICH IS A TAX CREDIT FOR
SMALL BUSINESSES THAT ADVERTISE
IN LOCAL NEWS. SO IT GOES TO
RESTAURANTS AND GROCERY STORES
AND OTHER SMALL BUSINESSES. SO
UNDER THE FEDERAL BILL, IT'S
WOULD BE 50% OF THE VALUE UP TO
A $10,000 ADVERTISING SPEND SO
IF A SMALL BUSINESS IN ALAMEDA
PURCHASED $5000 WORTH OF
ADVERTISING IN THE ALAMEDA POST,
THE BUSINESS WOULD GET $2500
REBATE. SO IN THIS CASE, NÓ
GOVERNMENT AGENCY IS DECIDING
WHO GETS THE ADS. IT'S THE SMALL
BUSINESSES THAT ARE MAKING THAT
DECISION BASED ON THEIR VIEW OF
WHO'S GOING TO BE MOST
EFFECTIVE. THIRDLY A TAX CREDIT
FOR SUBSCRIPTIONS OR DONATIONS
TO LOCAL NEWS. WE LOVE THIS IDEA
IN CONCEPT. THIS IS IN AN
EARLIER FEDERAL VERSION. IT'S
REALLY ONE OF THE BEST IDEAS IN
PRINCIPLE BECAUSE YOU'RE
EMPOWERING CONSUMERS TO HELP
SUPPORT LOCAL NEWS. UM AND THEY
MAKE THE CHOICES ABOUT WHICH
WHICH LOCAL NEWS THEY THINK IS
BEST. TO BE HONEST, AS WE GOT
INTO THIS, WE FOUND A COUPLE
GLITCHES IN IN THE IN THE
POLICY. ONE WAS THAT, AT LEAST
ON THE FEDERAL LEVEL, IT WOULD.
MOSTLY IT WOULD ONLY GO TO
ITEMIZERS AND THERE WAS REALLY
NÓ GUARANTEE THAT MOST OF THE
TAX BENEFIT WOULDN'T GO TO
PEOPLE WHO ARE ALREADY PAYING
FOR SUBSCRIPTIONS INSTEAD OF
TRYING TO GENERATE NEW ONES. BUT
WE LOVE THE CONCEPT AND WOULD BE
HAPPY TO WORK WITH YOU TO TRY TO
FIGURE OUT. UM YOU KNOW HOW TO
DO THAT. AND THEN LASTLY, I
WOULD SAY THAT THERE ARE WAYS OF
HAVING USING THE SYSTEM TO
ENCOURAGE WHAT WE CALL
REPLANTING, WHICH IS TO SAY,
ENCOURAGING LOCAL COMMUNITIES TO
ACQUIRE OR RETAIN NEWSPAPERS. SO
THEY DON'T GET SOLD TO, UH TO
HEDGE FUNDS OR TO OUT OF STATE
COMPANIES SO YOU COULD GIVE TAX
BENEFITS TO LOCAL NONPROFITS OR
PUBLIC BENEFIT CORPORATIONS THAT
ACQUIRE NEWSPAPERS. YOU COULD
HAVE SOMETHING IN THE ILLINOIS
JUST PROPOSED WAS A 120 DAY
WAITING PERIOD ON WHETHER A NEWS
WHEN A NEWSPAPER IS GOING TO BE
SOLD TO AN OUT OF STATE. TO
ALLOW FOR COMMUNITY TO ORGANIZE
AROUND THAT. UM WE HAVE OTHER
EXAMPLES IN THE WRITTEN
TESTIMONY OF OTHER WAYS OF
HELPING LOCAL NEWS AND
ELABORATION ON THESE TAX IDEAS.
I GUESS I JUST THE LAST THING I
WOULD SAY IS THAT THE, UH,
REVISED VERSION OF THE
CALIFORNIA JOURNALISM
PRESERVATION ACT, YOU KNOW, WE
THINK COULD BE USEFUL IF WE'RE
TARGETED TOWARD CALIFORNIA
PUBLISHERS AND FOCUSED ON
INVESTING IN JOURNALISM RATHER
THAN BASED ON TRAFFIC. BUT WE
HAVE A LOT OF DETAIL ON ALL OF
THESE IDEAS THAT WE'RE HAPPY TO
PROVIDE FOR YOU. AND THANK YOU
AGAIN FOR, UH, FOCUSING YOUR
ATTENTION ON THIS. THANK YOU, MR
WALDMAN. THANK YOU FOR YOUR YOUR
GOOD WORK IN THIS SPACE FOR A
LONG TIME. APPRECIATE YOUR YOUR
INSIGHT. UH, MR PIERCE, YOU'RE
YOU'RE ON THE GROUND FLOOR
THERE, AND IN SO MANY WAYS YOU
GET TO HEAR THE THEORISTS AND
THE LAWYERS AND YET, UH, YOU'RE
YOU'RE LIVING IN THE JOURNALISM
LIFE. UH NOW AND WE APPRECIATE
THE PERSPECTIVE THAT YOU HAVE
PERSONALLY AS WELL AS ON BEHALF
OF THE GUILT. SO THANK YOU FOR
PARTICIPATING. ALL RIGHT, UM,
AND THANK YOU SO MUCH, SENATOR,
AND, UH, THE SAME COMMITTEE
MEMBERS FOR HEARING FROM US. I
THINK THIS IS A VITAL ISSUE. OF
COURSE. I AM. PRESIDENT OF MEDIA
GUILD OF THE WEST FOR A LOCAL
UNION OF THE NEWS GUILD. èC W A
MY OWN LOCAL REPRESENTS
NEWSROOMS IN SOUTHERN CALIFORNIA
, ARIZONA AND TEXAS. UM UH,
MEMBERS FROM NEW SKILL AT
VARIOUS NEWS GUILD LOCALS
PRODUCE THE NEWS THAT MILLIONS
OF CALIFORNIANS READ EVERY DAY
FROM LEGACY NEWSROOMS LIKE THE
FRANCISCO CHRONICLE TO NEW
NONPROFIT NEWSROOMS LIKE CAL
MATTERS. SO I WAS A LONG TIME
REPORTER FOR THE LOS ANGELES
TIMES UP UNTIL A FEW WEEKS AGO,
I TOOK A BUY OUT AS PART OF THE
LATEST MAJOR CUT TO OUR
NEWSROOM, UM, WHICH HAS SHRUNK
ROUGHLY 40% SINCE 2019. SO WE
DEEPLY APPRECIATE YOUR INTEREST
IN FINDING WAYS TO SUPPORT LOCAL
JOURNALISM AND LOCAL
JOURNALISTS. UM, I WOULD. I
WOULD URGE YOU TO THINK IN TERMS
OF BILLIONS, NOT MILLIONS. IF
YOU'RE THINKING ABOUT WHAT'S
NECESSARY TO OFFSET THE ECONOMIC
LOSSES TO JOURNALISM OVER THE
LAST FEW DECADES. UM UH, IN OUR
INDUSTRY, MANY FOR PROFIT AND
NONPROFIT NEWSROOMS ARE FACING A
LOT OF THE SAME ECONOMIC
HEADWINDS AND A LOT OF THEM HAVE
CUT JOURNALISM JOBS, ESPECIALLY
IN THE LAST YEAR, UM, WITH
OBVIOUS RISKS TO THE HEALTH OF
OUR DEMOCRACY. MY OWN LOCAL HAS
NOT DEVELOPED A POSITION
SPECIFICALLY ABOUT A DIGITAL
ADVERTISING TAX. IT'S
COMPLICATED AND I YOU KNOW IT
WAS VERY INTERESTED IN HEARING
THE TESTIMONY EARLIER. IT'S AN
IT'S AN ISSUE THAT WE'LL STUDY
AND WE'RE OPEN TO HAVING
CONVERSATIONS ABOUT IT. UM THE
LOCAL NEWS CRISIS IS SO DIRE
THAT WE TEND TO HAVE A YES AND
APPROACH TO JOURNALISM
LEGISLATION WHERE YOU KNOW WE'RE
OPEN TO MULTIPLE DIFFERENT
CONCEPTS AND DIFFERENT LANES OF
ATTACKING THE PROBLEM FACING OUR
INDUSTRY. BECAUSE THERE ARE A
LOT OF THEM. UM AND SO IT'S NOT
INCONSISTENT FOR US TO SUPPORT
UM, ASSEMBLY MEMBER WIX BILL AND
ALSO LOOK AT OTHER LEGISLATION
AS WELL. UM IN RECENT YEARS, UM,
A GROWING BODY OF ACADEMIC
RESEARCH SUGGESTS THAT NEWSPAPER
CLOSURES AND THE LOSS OF LOCAL
JOURNALISM JOBS HAS BEEN
ASSOCIATED WITH MANY HIDDEN
COSTS IN OUR COMMUNITIES,
NEGATIVE EXTERNALITIES,
INCLUDING HIGHER MUNICIPAL
BORROWING RATES, HIGHER INTEREST
RATES SPREADS IN LOCAL BANK
LOANS AND MEASURABLE DECLINES IN
CIVIC ENGAGEMENT. THESE SORTS OF
COSTS SHOULD BE INCLUDED IN ANY
KIND OF ANALYSIS ON THE IMPACT
OF TAX RELIEF FOR LOCAL
JOURNALISM JOBS, GIVEN THE
EVIDENCE THAT COMMUNITIES MAY
ALREADY BE BEARING ECONOMIC
COSTS FROM NEWSROOM CLOSERS. THE
SENATOR MENTIONED NOT HAVING ANY
NEWSROOMS IN HIS OWN ASSEMBLY
DISTRICT OR HIS OWN DISTRICT
ANYMORE, AND THAT'S SORT OF AN
EXAMPLE OF THE KIND OF PROBLEMS
THAT ARE MAY ALREADY BE
EXPERIENCED BY THESE COMMUNITIES
THAT YOU KNOW, WE DON'T KNOW
WHAT KIND OF COSTS THEY'RE
ALREADY EXPERIENCING JUST
BECAUSE THEY HAVEN'T BEEN
STUDIED. SO THE NEWS GUILD IN
OUR PARENT UNION, THE
COMMUNICATION WORKERS OF AMERICA
TEND TO SUPPORT THE TYPE OF TAX
FRAMEWORKS ADVANCED BY MR
WALDMAN AND REBUILD LOCAL NEWS
COALITION. UM YOU KNOW,
PARTICULARLY TAX CREDITS,
ENCOURAGING THE HIRING AND
RETENTION OF JOURNALISTS ON A
BROAD BASED AND NON
DISCRIMINATORY BASIS. UM,
CALIFORNIA HAS HAD EXPERIENCE
AND SUCCESS USING TAX POLICY TO
PROMOTE EMPLOYMENT AND RETAIN
PRODUCTION IN ANOTHER BUSINESS
SECTOR VITAL TO OUR STATE, THE
CALIFORNIA FILM AND TELEVISION
TAX CREDIT PROGRAM HAS INCLUDED
A PRODUCTION INCENTIVE DESIGNED
TO SUPPORT THE EMPLOYMENT OF
BELOW THE LINE FILM WORKERS IN
CALIFORNIA. UH, RESEARCH BY THE
L, A COUNTY ECONOMIC DEVELOPMENT
CORPORATION HAS CREDITED THAT
PROGRAM WITH SUPPORTING MORE
THAN 110,000 JOBS IN CALIFORNIA
BETWEEN 2015 AND 2020. IT'S
MANAGED TO DO SO WITHOUT
VIOLATING THE DORMANT COMMERCE
CLAUSE. SO IN IN TERMS OF YOU
KNOW, IF YOU IF YOU GET THE
REVENUES TO SPEND ON JOURNALISM
WHAT DO YOU DO WITH IT? UM, BY
MEMBERSHIP RESOLUTION. MY LOCAL
ALSO SUPPORTS WELL DESIGNED
INITIATIVES TO PUBLICLY FUND
PUBLIC INTEREST JOURNALISM. UM
BUT I'LL SAY AS PRESIDENT, MY
BRIEF EXPERIENCE IS A SOMEWHAT
IDEALISTIC ADVOCATE FOR
CALIFORNIA JOURNALISTS OVER THE
LAST COUPLE OF YEARS HAVE BECOME
A LITTLE BIT MORE SKEPTICAL OF
GRANT PROGRAMS IN PARTICULAR.
UH, SANDRA GLASER. YOU MAY
REMEMBER THAT MY LOCAL TOOK A
SUPPORTIVE AMENDED POSITION ON
YOUR SENATE BILL 911 A COUPLE OF
YEARS AGO, DIFFERENT FROM THE
SENATE BILL 911 THAT WAS
DISCUSSED THIS MORNING AND THAT
WOULD HAVE CREATED THE STATE
GRANT PROGRAM FOR PUBLIC
INTEREST JOURNALISM. UM I STILL
FEEL PRETTY GOOD ABOUT WHERE
THAT BILL WAS HEADED WITH THE
INCOMING AMENDMENTS THAT WE HAD
BEEN WORKING ON WITH YOUR OFFICE
, BUT ULTIMATELY I WAS DISTURBED
TO ALREADY SEE INFIGHTING
BETWEEN PUBLISHERS WHO ARE GOING
TO BE COMPETING WITH EACH OTHER
FOR A LIMITED AMOUNT OF GRANT
FUNDING FROM THE STATE, WHICH
WHICH BOTHERED ME BECAUSE I
THINK IF THE STATE IS GOING TO
PROVIDE SOME SORT OF ECONOMIC
SUPPORT FOR NEWSROOMS, IT WOULD
BE PREFERABLE THAT THAT SUPPORT
PROMOTES GOOD BEHAVIOR BY
EVERYBODY ON A SORT OF NEUTRAL,
CONSISTENT AND PREDICTABLE BASIS
BECAUSE I'M WORRIED THAT KIND OF
SET UP WHERE YOU HAND PICKING
WINNERS AND LOSERS YEAR AFTER
YEAR IS GONNA BE A RECIPE FOR
INCENTIVIZING NEWS COMPANIES AND
NEWSROOMS OR EVEN JOURNALISTS TO
COME, YOU KNOW, TRY TO APPROACH
THE STATE AND GET SPECIAL FAVORS
OR PREFERENTIAL TREATMENT FOR
THEMSELVES. INSTEAD OF STICKING
TO GENERAL ADVOCACY FOR OUR
ENTIRE INDUSTRY, WHICH I THINK
IS FAIR GAME. UH AND SO, THE
CREATION OF THE BERKELEY SCHOOL
UM UH, FELLOWSHIP PROGRAM FOR
EARLY CAREER JOURNALISTS WAS A
GOOD SOLUTION. I THOUGHT SINCE
THAT FELLOWSHIP IS ADMINISTERED
BY EXPERIENCED JOURNALISM
EDUCATORS AGAIN. WE'RE TALKING
ABOUT PROVIDING TRAINING AND
SUPPORT FOR YOUNG JOURNALISTS BY
PLACING THEM IN PROFESSIONAL
NEWSROOMS, UM, THAT, IN MANY
CASES MAY NOT LIKELY BE ABLE TO
AFFORD TO KEEP THEM ON BOARD
ONCE THEY'RE TEMPORARY STATE
FUNDING ENDS, SO YOU KNOW MY OWN
NEWSROOM BEING AN EXAMPLE OF
THAT AND THE 25 MILLION THAT THE
LEGISLATURE INVESTED IN THE
BERKELEY FELLOWSHIP IS THOUGHT
TO BE THE LARGEST STATE
ALLOCATION ANYWHERE IN THE U S¼
EVER TO SUPPORT LOCAL
JOURNALISM. THANK YOU, BY THE
WAY, UM, BUT THAT HISTORIC
INVESTMENT IS DWARFED BY THE 30
TO 40,000,030 TO $40 MILLION AT
THE LOS ANGELES TIMES REPORTEDLY
LOST IN 2020 THREE ALONE. I MEAN
, I'VE LOST FAR MORE COWORKERS
IN THE PAST YEAR THAN THE
BERKELEY PROGRAM IS EVEN
BUDGETED TO EMPLOY ACROSS THE
ENTIRE STATE, AND THAT'S IN A
SINGLE NEWSROOM. SO WHEN I SAY
LIKE, WE NEED TO BE THINKING IN
TERMS OF BILLIONS, NOT MILLIONS.
I ONE OF THE THINGS I
CONSISTENTLY TRY TO DO WHEN I
APPEAR IN SETTINGS LIKE THESE IS
TO JUST EMPHASIZE THE LIKE THE
ENORMOUS SCALE OF WHAT WE'RE
TALKING ABOUT. THE THAT THAT
DISASTER THAT HAS ALREADY
HAPPENED? I MEAN, YOU KNOW,
WE'RE STILL WE HAVE NEWSROOMS.
STILL THAT ARE CUTTING JOBS, BUT
THE DISASTER HAS ALREADY
HAPPENED. SO UM, THAT'S WHY I
HAVE TO THINK WE HAVE TO THINK
MUCH BIGGER AND SO AGAIN. I
THANK THE COMMITTEE FOR YOUR
TIME AND LOOK FORWARD TO YOUR
EFFORTS TO SUPPORT LOCAL
JOURNALISM IN CALIFORNIA. THANK
YOU, MR PIERCE. UM I THINK YOU
HEARD AND I HEARD THAT THESE,
UH, TAKING SOME OF THE TAX
STANDARDS OF OTHER STATES IN
THIS SPACE THAT THE UPWARDS OF
$500 MILLION COULD BE GENERATED
BASED AGAIN ON HOW IT'S DONE.
BUT I CERTAINLY AGREE WITH YOU
THAT I I'M THRILLED AT THE
SUCCESS OF THE BERKELEY
FELLOWSHIP. BUT NÓ. IT'S JUST A
SMALL PART OF WHAT NEEDS TO BE
DONE THAT THAT'S NOT A RESCUE
PLAN THAT'S DOING SOME GOOD WORK
AND GOOD THINGS AND A LOT OF
PLACES. YEAH, AND I. I WANNA BE
CLEAR THAT I'M NOT TALKING DOWN
ABOUT THE BERKELEY PROGRAM. I'M
I'M A UNIVERSITY OF MISSOURI
GRADUATE, AND I'M PROUD TO SAY
HERE, THOUGH, THAT YOU CAN GET A
WORLD CLASS JOURNALISM EDUCATION
RIGHT HERE IN CALIFORNIA, AND
THAT'S ONE OF THE THINGS THAT
REALLY HELPS WITH THAT, AND SO
THE STATE DOES A FANTASTIC JOB
PREPARING JOURNALISTS TO GO OUT
INTO THEIR COMMUNITIES AND TO
REPORT ON WHAT'S GOING ON EVEN
TO REPORT ON YOU, BUT IT'S
REALLY LIKE WE MAKE SURE THEY
HAVE CAREERS ONCE WE GET THEM
OUT OF THE WONDERFUL, YOU KNOW,
SCHOOLING SYSTEM THAT WE'VE
CREATED FOR THEM. THAT'S THAT'S
THE REAL CRISIS. INDEED. I. I
WANTED TO, UH I APPRECIATE YOU
SHARING YOUR SUPPORT FOR A
NUMBER OF THE UH, THE SPENDING
SIDE ELEMENTS THAT REBUILD LOCAL
NEWS HAS SHARED WITH US TODAY,
BUT I WANT TO GO BACK TO YOU, UM
YOU KNOW A LOT OF WHAT, UH,
COMMUNITY NEWS. WHAT ALLOWS
COMMUNITY NEWSPAPERS TO SURVIVE
IS WHAT I GUESS IN THE BUSINESS
YOU'D REFER TO AS STRINGERS,
FOLKS THAT AREN'T FULL TIME
EMPLOYEES, UM IN IN IN REVIEWING
AND KNOWING THAT UM, IS THERE
ANYTHING YOU WANT TO SAY ABOUT
HOW YOU TAKE THAT INTO ACCOUNT
THAT IF IT'S A AN EMPLOYMENT TAX
CREDIT MAY NOT ALWAYS
INCORPORATE THOSE, SO ANY
THOUGHTS ABOUT FOR A LOT OF
THESE SMALLER OUTLETS THAT THAT
CAN RELY ON A FULL TIME, OTHER
WAYS THAT OUR TAX SPENDING SIDE
CAN HELP. YEAH THAT'S A GREAT
QUESTION. I THINK THERE ARE WAYS
OF CONSTRUCTING IT SO THAT YOU
COULD ESSENTIALLY TAKE, UM SOME
AMOUNT OF MONEY AND COUNTED AS
AN F Tð E LIKE IF YOU AGGREGATE
X AMOUNT OF MONEY SPENT ON
STRINGERS, FREELANCE AND
CONTRACTORS EDITORIALLY, ADDING
IT UP TO BEING AN F Tð OR A HALF
OF AN F Tð SO THAT THE NEWSROOM
WOULD BE ABLE TO BENEFIT FROM
THAT AS WELL. IN SOME CASES, THE
NEWSROOM MAY WANT TO CONVERT
THEIR PART TIME PEOPLE INTO
EMPLOYEES IF THEY HAVE THE AND
THAT WOULD BE GREAT. WE'VE HAD A
NUMBER OF PEOPLE WHO SAID WE
HAVE THESE FOLKS AS CONTRACTORS
AND STRINGERS. BUT IF THIS
EXISTED, WE'D PROBABLY MAKE THEM
AN EMPLOYEE. BUT I THINK IF WE
COULD COME UP WITH A WAY THAT
WOULD ALSO DEAL WITH THE FACT
THAT ESPECIALLY A VERY SMALL
LEVELS, THAT IS THE REALITY THAT
A LOT OF THEM DO RELY HEAVILY ON
FREELANCE. LET ME GO BACK TO MR
PIERCE FOR A MOMENT, YOU KNOW,
PART OF THE PART OF THE
INTEGRITY OF OUR JOURNAL.
JOURNALISM CORPS IS RECOGNIZING
CONFLICTS OF INTEREST. AND UM I
DON'T KNOW, I. I LIKE YOUR
REACTION TO THIS THAT YOU KNOW,
THIS IS THIS HAS BEEN A SLOW
MOTION CRASH. AND WHILE THEY'VE
SEEN SOME NOTABLE STORIES ABOUT
CHRONICLING IT UM AND CERTAINLY,
WHEN A NEWSPAPER GOES OUT OF
BUSINESS, YOU GET THAT SAD,
FRONT PAGE STORY THAT SAYS THIS
IS OUR LAST EDITION. UM BUT DO
YOU THINK THAT THAT JOURNALISTS
BECAUSE OF THEIR INTEGRITY ARE
NOT COVERING THIS CRASH BECAUSE
IT INVOLVES THEM AND THEIR
ENTERPRISES. DO YOU THINK THAT
THERE'S THE COVERAGE THAT YOU
WOULD EXPECT, GIVEN THE SEVERITY
AND THE IMPORTANCE OF WHAT'S
HAPPENING AROUND US? I? I WOULD
I WOULD REFRAME IT SLIGHTLY,
WHICH IS THAT I THINK. IN MANY
CASES, PUBLISHERS ARE RELUCTANT
TO BROADCAST TO THEIR OWN
READERS. HOW WE THEY ARE. I MEAN
, IT'S NOT NECESSARILY GOOD
BUSINESS TO TELL YOUR OWN
READERS THAT LIKE, HEY, WE'VE
HAD TO CUT BACK OUR SERVICES A
LOT, AND YOU'RE GETTING A WORSE
PRODUCT. AND, YOU KNOW,
MEANWHILE, YOUR SUBSCRIPTION
RATE IS GOING UP. UM UNIONS LIKE
MINE. PART OF THE REASON. I
GUESS THAT WE'VE WE'VE FORMED IS
THAT, UM WE FEEL THE STRAIN IN
OUR NEWSROOMS. MANY JOURNALISTS
GO YEARS WITHOUT RAISES. I HAD
ACTUALLY GONE 2.5 YEARS WITHOUT
A RAISE AT THE L A TIMES BEFORE
I LEFT A FEW WEEKS AGO. UM YOU
KNOW, WE'VE WE'VE TAKEN ON THE
MANTLE OF TRYING TO RAISE THE
PUBLIC OUTCRY AND TRY TO TELL
THE PUBLIC WHAT'S GOING ON
BECAUSE YOU ACTUALLY LOOK AT
SURVEY DATA OF NEWS CONSUMERS. A
LOT OF THEM ARE UNAWARE THAT
THERE IS AN ECONOMIC CRISIS IN
THEIR LOCAL COMMUNITIES. SO YOU
KNOW IF YOU LOOK AT SURVEYS, AND
YOU'RE ASKING THE PUBLIC LIKE DO
YOU THINK YOUR LOCAL NEWS
OUTLETS ARE DOING OK FINANCIALLY
AND THEY SAY YES THEN I THINK,
EVEN AS JOURNALISTS, WE'VE DONE
A POOR JOB, COMMUNICATING TO THE
PUBLIC EXACTLY WHAT KIND OF DIRE
STRAITS THAT WE'RE IN? BUT YOU
KNOW THE OTHER PART OF IS
ABSOLUTELY CORRECT. I MEAN,
JOURNALISTS. WE'RE TEND TO
LOATHE TO MAKE OURSELVES THE
CENTER OF THE STORY AND TO, YOU
KNOW, PUT OURSELVES BEFORE OUR
OWN COMMUNITIES. AND SO YOU
KNOW, IT'S AWKWARD FOR
JOURNALISTS TO COME AND TESTIFY
AND TO, YOU KNOW, LOBBY AND PUSH
FOR CERTAIN POLICIES. BY
DEFINITION. WHEN WE GO TO THOSE
GREAT JOURNALISM SCHOOLS,
THEY'RE TELLING US DON'T DO
THAT. SO THIS IS YOU KNOW, I I'M
HAPPY TO DO THAT FOR MY FELLOW
JOURNALISTS. UM, WHILE
RECOGNIZING THAT A LOT OF THEM
WOULD NOT BE COMFORTABLE DOING
THE SAME THING THAT I'M DOING
RIGHT NOW, MR WALD. I THINK THE
OTHER FACTOR IS THAT CONSUMERS
FEEL OVERWHELMED BY INFORMATION
AND NEWS. SO IF YOU TALK TO A
REGULAR PERSON WHO'S NOT IN THE
INDUSTRY, AND YOU SAY THERE'S A
LOCAL NEWS SHORTAGE, THEY LOOK
AT YOU. WITH A STRANGE FACE.
WHAT DO YOU MEAN SHORTAGE I'VE
GOT I'M JUST ABSOLUTELY DROWNING
IN INFORMATION. THE SHORTAGE, OF
COURSE, IS IN THE LOCAL
REPORTING. UH, BUT I THINK PART
OF WHAT HAS MAYBE TAKEN A LITTLE
WHILE FOR PEOPLE TO REALIZE THE
SEVERITY OF THE CRISIS AND THE
IMPLICATIONS FOR COMMUNITIES IS
THAT THERE IS A KIND OF NATIONAL
NEWS AVALANCHE AT THE SAME TIME.
THERE'S THIS SEVERE LOCAL NEWS
SHORTAGE. YOU KNOW ANOTHER
THING? AN OBSERVATION I HAVE IS
THAT THERE HAVE BEEN PERSISTENT
ATTACKS ON THIS SO CALLED
MAINSTREAM MEDIA OUT THERE. AND
I. I CHUCKLE. SOMETIMES IT'S I
DON'T MEAN TO SAY IT'S A
LAUGHING MATTER, BUT I. I LOOK
AT THAT, AND I AND I KNOW THAT
IT'S APPEARING IN ALL THOSE
STORIES BECAUSE THE JOURNALISTS
THEMSELVES WANT TO BE FAIR, AND
THEREFORE THEY PUT THAT SOME OF
THAT CRAZINESS IN THERE BECAUSE
THEY WITHOUT NECESSARILY FACT
CHECKING BECAUSE IT'S ABOUT
THEMSELVES AGAIN. AND YET IT'S A
DRUMBEAT OUT THERE THAT I HAVE
SEEN FROM CERTAIN FACTIONS OF
OUR POLITICAL ESTABLISHMENT TO
JUST ERODE THE INTEGRITY OF OUR
OF OUR JOURNALISM COMMUNITY OF
THE OF THE FREE PRESS THAT YOU
SEE THAT IT'S AN AWKWARD THING
AS A CARD CARRYING MEMBER OF THE
MAINSTREAM MEDIA LIKE II, I
RECOGNIZE THIS. I WILL, YOU KNOW
, LOOK, I ALSO SAY THAT, UM YOU
KNOW A LOT OF THE PUBLIC AND I
SEE THIS OUT THERE THEY THEY
THEMSELVES WANT MORE PARTISAN
MEDIA? THEY WANT MORE
OPINIONATED ANGLES ON THE ISSUES
THAT THEY'RE DEALING WITH THE
WORLD'S COMPLICATED AND
SOMETIMES IT'S YOU KNOW, IT'S
HARD TO TAKE THE TIME TO READ A
79 PAGE LAW REVIEW ARTICLE ABOUT
WHY A DIGITAL AD TAX IS A GOOD
IDEA, BUT IT MIGHT BE EASIER TO
LIKE. LISTEN TO A 32ND TIK, TOK,
UH, VIDEO, SAYING WHY IT'S
AWESOME, YOU KNOW, AND THAT'S
THAT'S THE REALITY OF LIKE HOW
PEOPLE ARE ENGAGING WITH THE
MASSIVE AMOUNT OF INFORMATION
THAT THEY'RE COMING IN. UM YOU
KNOW, II. I THINK THE PUBLIC
ATTACKS AGAINST JOURNALISTS ARE
SAD, BUT, UM, YOU KNOW, I
BRINGING IT BACK TO THE POLICY
I. I THINK THAT'S WHY I'VE COME
TO THE POSITION OF TRYING TO
ENCOURAGE UM NON-DISCRIMINATORY,
OR OR MORE VIEWPOINT NEUTRAL
PUBLIC POLICY ON SUPPORTING
NEWSROOMS AND JOURNALISTS,
BECAUSE I DO THINK THAT, UM, I,
I SEE THIS SOMETIMES IN OTHER
TESTIMONY OR DEBATES ABOUT
JOURNALISM ISSUES, BUT LIKE
PEOPLE WANT TO CREATE A CERTAIN
SPECIFIC KIND OF LOCAL MEDIA,
AND I KNOW THAT THEY HAVE GOOD
INTENT, BUT LIKE THAT, YOU KNOW,
I THINK YOU MENTIONED VICTOR
ORBAN AND, UM YOU KNOW THE
NATION OF HUNGARY. UM, THAT IS A
COUNTRY THAT IS VERY EFFECTIVELY
USED MEDIA POLICY. CREATE MEDIA
ONLY FAVORABLE TO THE ONE PARTY
THAT IS IN POWER. AND LIKE, YOU
KNOW, GOD LOVE ALL OF YOU, BUT
YOU KNOW, WE'RE IN A STATE WHERE
LIKE IT'S DOMINATED BY ONE
POLITICAL PARTY IN PARTICULAR,
AND SO I DO WANT US TO BE A
LITTLE BIT SELF CONSCIOUS ABOUT
YOU KNOW FOR ME? YES I. I THINK
WE CAN CREATE RESPONSIBLE
JOURNALISM POLICY RIGHT HERE IN
CALIFORNIA. AT THE SAME TIME. I
ALSO REPRESENT JOURNALISTS IN
TEXAS AND I WOULD LOVE TO BE
ABLE TO SAY THAT THEY CREATED A
POLICY IN PA. IN CALIFORNIA THAT
WAS FAIR AND NON DISCRIMINATORY
AND ENCOURAGED GOOD BEHAVIOR IN
COMMUNITY INVESTMENT BY ALL
SORTS OF DIFFERENT NEWSROOMS,
AND IT'S THE KIND OF THING THAT
WE COULD TAKE TO TEXAS.
DOMINATED BY A DIFFERENT PARTY
AND SAY, LIKE, YOU KNOW, THIS
COULD BE A GOOD IDEA FOR YOU,
TOO. THIS IS SOMETHING THAT WE
CAN PROMOTE THAT'S FAIR AND
DOESN'T DISCRIMINATE AND ALSO
DOESN'T TURN PEOPLE AGAINST EACH
OTHER. BUT THOSE INSIGHTS ARE
VERY HELPFUL. I MEAN, THE GOAL,
OF COURSE, IS TO FIND THE
RESOURCES. BUT THIS IS ON THE
SPENDING SIDE THAT YOU'RE SAYING
THAT YOU KNOW, THERE ARE THERE
ARE FOLKS IN YOUR WORLD THE
PURIST WHO WOULD SAY GOVERNMENT
SHOULD HAVE A COMPLETE HANDS OFF
AND I ACKNOWLEDGE THE IMPORTANCE
OF THE INDEPENDENT JOURNALISM.
UM AND IT'S A IT'S A TOUGH ONE
TO EVEN HAVE THESE CONVERSATIONS
TO SAY THAT IS THERE RESOURCES.
HOW CAN GOVERNMENT TALK ABOUT SB
911 FROM TWO YEARS AGO, AND THE
CHALLENGE OF TRYING TO THREAD
THAT NEEDLE WHERE YOU WANT TO
PUT MONEY THERE, BUT YOU WANNA
HAVE THE HANDS OFF AND HOW DO
YOU DO IT? SO YOUR INSIGHTS ARE
HELPFUL THERE, BUT, UH, IT IT
MIGHT BE SEEN AS SOME AS, UH,
YOU KNOW, CROSSING A BOUNDARY
THAT THEY THINK THE GOVERNMENT
SHOULD NEVER CROSS. BUT WELL, I.
I KNOW MR WALDMAN HAS SOME SOME
LINES ABOUT THIS, BUT THE
GOVERNMENT IS ACTUALLY LONG BEEN
IN THE BUSINESS OF SUPPORTING
JOURNALISM IN AMERICAN HISTORY
FROM THE FOUNDERS WITH POSTAL
SUBSIDIES TO MAKE EASIER TO GET
NEWSPAPERS TO READERS AT THE
FOUNDING OF OUR REPUBLIC TO
UNDERSTAND OUR DEMOCRACY, SO IT
IT'S WE HAVE A HISTORY OF THIS.
ACTUALLY IT'S ACTUALLY MORE IN
RECENT DECADES, WHERE THE
GOVERNMENT HAS GOTTEN MORE
SCARED OF LAYING DOWN SOME BASIC
RULES JUST TO MAKE THE
MARKETPLACE FAIR. AND I DO THINK
WHEN I COME HERE, UM I'M ASKING
FOR FAIRNESS. WHEN I'M
ADVOCATING FOR BILLS LIKE
ASSEMBLY MEMBERS. WIX I THINK
THAT BILL IS A MATTER OF
FAIRNESS. YOU KNOW, I THINK WE
HAVE SOME VERY, VERY, VERY LARGE
COMPANIES THAT HAVE THROTTLED
JOURNALISM IN CALIFORNIA
ECONOMICALLY. AND I'M I'M JUST
ASKING FOR MARKETPLACE THAT IS
ACTUALLY GOING TO PRODUCE THE
RESULTS THAT WE NEED TO SUSTAIN
THIS DEMOCRACY. YOU KNOW, I
DON'T WANT FAVORS II I WANT I
WANT A WORLD THAT MAKES SENSE.
I'M GONNA GIVE THE LAST ANSWER
TO MY LAST QUESTION TO MR
WALDMAN, AND THEN WE'RE GOING TO
GO TO PUBLIC COMMENT UNLESS
PANEL MEMBERS HAVE QUESTIONS. UM
MISTER WALDEN, AS AS MR PIERCE
HAS INDICATED. GOVERNMENT HAS
PLAYED A ROLE IN SUPPORTING
INDEPENDENT JOURNALISM HERE IN
AMERICA AND AROUND THE WORLD AND
PEOPLE THINK IS THIS THE
EXCEPTION TO THE RULE, AND MAYBE
YOU COULD SPEAK TO EXAMPLES OF
IN ENGLAND WITH THE BB, èC AND
OTHER PLACES WHERE, IN AN
APPROPRIATE WAY, AND IF THEY'RE
INAPPROPRIATE, YOU SHOULD SAY,
BECAUSE WE DON'T WANT ONE PARTY
CONTROLLING THE NEWS. AS WE
UNDERSTAND IS HAPPENING IN
HUNGARY. COULD YOU SPEAK TO
THAT? YEAH, WE ACTUALLY IN THE
UNITED STATES RELATIVE TO THE
REST OF THE WORLD. WE ACTUALLY
SPEND A SMALLER PERCENTAGE OF
BUDGET AND G Dð P TO SUPPORT
MEDIA THAN OTHER COUNTRIES, BUT
WE STILL HAVE HAD VERY
SIGNIFICANT SUPPORT FOR THE
MEDIA OR POLICY THAT HAS HELPED
OVER THE YEARS. UH THE POSTAL
SUBSIDY THAT THE FOUNDING
FATHERS CREATED LITERALLY IN
THEIR FIRST CONGRESS. IT WAS
ACTUALLY ONE OF THE FIRST ACTS,
UH, OR SOCIAL PROGRAMS THAT THEY
CREATED WAS A MASSIVE SUBSIDY
FOR THE NEWSPAPER INDUSTRY. FORM
OF HAVING LOWER POSTAGE RATES
FOR NEWSPAPERS TO BE SENT AROUND
IN MODERN DOLLARS. IT WOULD BE
ABOUT $40 BILLION A YEAR ABOUT
THE SIZE OF THE NASA BUDGET THAT
THE GOVERNMENT WAS SAYING
SUPPORT, BUT IT'S REALLY
INTERESTING TO LOOK AT WHY THAT
WORKED. IT WASN'T YOU KNOW BEN
FRANKLIN SITTING THERE WITH, YOU
KNOW, FEDERALIST AND
JEFFERSONIAN PAPERS, DECIDING
WHICH WERE GOOD AND SAYING THESE
SHOULD GET A BENEFIT. AND THESE
SHOULDN'T IT WAS A BROAD BASED,
UH BENEFIT THAT THAT HELPED ALL
SORTS OF DIFFERENT NEWSPAPERS,
INCLUDING ONES THAT YOU KNOW
GEORGE WASHINGTON HATED. AND
THEY JUST ACCEPTED THAT BECAUSE
THEY SAID, WE HAVE TO LIFT UP
THE WHOLE FIELD IN A FAIR WAY,
AND IT WAS ACCEPTED BY THE
PUBLIC FOR THAT SAME REASON, AND
THAT'S WHY I THINK WE END UP
COMING BACK TO SOME OF THESE TAX
IDEAS BECAUSE EVEN THOUGH IT'S
NOT ABOUT POSTAL SUBSIDIES, THE
PRINCIPLES OF THE TAX IDEAS ARE
ACTUALLY THE SAME AS THE
PRINCIPLES THAT WERE IN THE
POSTAL SUBSIDY. STANDARDS THAT
ARE UNIVERSAL THAT WOULD BE
APPLIED TO A YOU KNOW, BROAD
RANGE OF PEOPLE. AND ONE
ENCOURAGING THING IS THAT YOU
KNOW ON THIS. THIS FEDERAL BILL,
WHICH INCLUDES THE EMPLOYMENT
TAX CREDIT AND THE TAX CREDIT
FOR SMALL BUSINESSES THAT
ADVERTISE HAS NOW BEEN ENDORSED
BY THE NATIONAL RESTAURANT
ASSOCIATION, 21 REPUBLICANS AND
21 DEMOCRATS. SO WHAT WE ARE
FINDING IS THAT THIS PARTICULAR
APPROACH IS VIEWED AS MORE
NEUTRAL AND THAT LEGISLATORS OF
ALL DIFFERENT IDEOLOGIES ARE
MAKING A DISTINCTION AND EVEN
THE ONES THAT ARE VERY, VERY
CRITICAL OF MAINSTREAM MEDIA.
AND WOULD RATHER NOT HELP
NATIONAL MEDIA. UM STILL ARE
SEEING THE IMPORTANCE OF LOCAL
NEWS AND THAT ULTIMATELY, IT'S
NOT IN THEIR MINDS ABOUT HELPING
KEEP JOBS FOR REPORTERS. I'M NOT
SURE EVERYONE CARES ABOUT THAT.
IT'S DOING REAL HARM TO THE
COMMUNITIES. IT'S MAKING
COMMUNITIES POORER, LESS
INFORMED, LESS ABLE TO ADDRESS
THEIR PROBLEMS HAVE HIGHER TAXES
. AND SO THAT I THINK WE DO IT
IS ABSOLUTELY TRUE. I MEAN, IT
IS KIND OF A FUNNY COALITION
BECAUSE IT'S LIKE A COALITION OF
PEOPLE WHO WOULD REALLY RATHER
NOT BE THERE LIKE NÓ. ONE REALLY
IS RUSHING TO THE IDEA THAT OH,
LET'S GET THE GOVERNMENT TO HELP
, BUT EVERYONE HAS REALLY COME
TO THE CONCLUSION THAT THE
CRISIS IS SO SEVERE AND THE
CONSEQUENCES TO DEMOCRACY AND
THE HEALTH OF COMMUNITIES ARE SO
GRAVE THAT WE REALLY DO NEED TO
LOOK AT CAREFUL FIRST AMENDMENT
FRIENDLY POLICIES AND THAT
FORTUNATELY, THEY DO EXIST. THEY
CAN BE DONE. WELL, THANK YOU
BOTH FOR YOUR TESTIMONY TODAY.
YOU BRING IN REALLY IMPORTANT
INSIGHT TO OUR WORK TO THE
CRISIS THAT IS THAT WE'RE IN THE
MIDDLE OF UM AND I APPRECIATE
THAT CONTINUED CONVERSATIONS AS
WE GO FORWARD, AND AS WE TRY TO
FIGURE OUT A WAY TO END THIS
RESCUE PLAN TO DO IT THE RIGHT
WAY. UM AND BUT IT'S CERTAINLY
ONE OF THE MOST IMPORTANT THINGS
WE CAN DO HERE IN THIS SENATE
THIS YEAR. SO THANK YOU BOTH
VERY MUCH. THANK YOU. WE'RE
GOING TO GO TO PUBLIC COMMENT.
UM AND DO YOU WANNA GET YOUR
VOTES IN BEFORE WE DO THAT? OK,
LET'S LET'S DO THAT. THEN, UM
AND A PAUSE FOR JUST A MOMENT WE
CAN OPEN UP THE ROLE FOR
PENDING. YEAH. SO WE'LL FIRST
WE'RE GONNA, UH SENATOR SKINNER.
WE HAVE A 6 FT TO ADOPT THE
RULES. SO LET'S START WITH THAT
MEASURE TO ADOPT THE RULES, AND
WE WILL CALL THE RULE ON THAT.
MOTION IS TO ADOPT A MEDIEVAL
CARE. VOTING I VICE CHAIR VOTING
I, SENATOR SKINNER SKINNER. I 70
THE BILL IS THAT THE RULES ARE
ADOPTED. 7 TO 0. NEXT STEPS. S¼
VÆ 911 BY SENATORS. MOTION IS TO
PASS TO THE COMMITTEE ON
MILITARY AND VETERANS AFFAIRS
WITH A CHAIR VOTING I VICE CHAIR
VOTING I, SENATOR SKINNER. NÓ
THAT BILL IS OUT 6 TO 0. S¼ VÆ
ONE, Ó FOUR BY SENATOR WILK,
PLEASE OPEN THE ROLL. MOTION IS
TO PASS AS AMENDED TO THE
COMMITTEE ON THE APPROPRIATIONS
CHAIR. VOTING I VICE CHAIR
VOTING I, SENATOR SKINNER.
DINNER I'M 7 TO 0 BILL IS OUT. 7
TO 0 S¼ B 927 BY SENATOR JOY
MOTION IS TO PASS THIS AMENDED
TO THE COMMITTEE ON
APPROPRIATIONS CHAIR. VOTING I
VICE CHAIR VOTING I, SENATOR
SKINNER. 6 TO 0. BILL IS OUT. 6
TO 0. ALL RIGHT, WE'RE GONNA GO
TO PUBLIC COMMENT, BUT ONE THING
I WANT TO SAY, UH AS WE IF THOSE
WHO WANT TO TESTIFY TO PLEASE
COME UP TO THE FRONT HERE IS
THAT YOU KNOW, CALIFORNIA YOU
KNOW WHAT PUT CALIFORNIA ON THE
MAP. AND IT WAS GOLD. IT WAS
GOLD MINING. THAT'S WHAT PUT
CALIFORNIA ON THE MAP BROUGHT
PEOPLE OUT FROM ACROSS THE
NATION ACROSS THE WORLD TO OUR
GREAT STATE AND IS THE BASIS FOR
SO MUCH OF OUR YOUNG HISTORY IN
THIS PLACE WE CALL CALIFORNIA.
BUT IF YOU TALK ABOUT THE MODERN
GOLD RUSH TODAY, ITS DATA MINING
, NOT GOLD MINING. IT'S DATA
MINING AND THE ABILITY OF THESE
SO THESE PLATFORMS TO CAPTURE
INDIVIDUALIZED DATA ON
CALIFORNIANS AND FOR THOSE FROM
AROUND THE WORLD HAS REALLY
IGNITED AN ENTERPRISE THAT IN
SOME WAYS, WE HAVE GREAT
APPRECIATION FOR AND PRAISE FOR,
AND YET WE SEE SOME OF THE
CONSEQUENCES OF THAT SUCCESS AS
WE HAVE HOLLOWED OUT NEWSROOMS
ACROSS THE STATE, LET ALONE
DOZENS AND THAT HAVE CLOSED. SO
THAT HAS BECOME THE MODERN DAY
GOLD RUSH IN CALIFORNIA IS THAT
DATA MINING AND WE HAVE TO FIND
A WAY TO BE SUPPORTIVE OF ALL
THE PLATFORMS THAT HAVE DONE SO
WELL THAT WE SO APPRECIATE THAT
INGENUITY AND INNOVATION, BUT WE
ALSO HAVE TO DEAL WITH THE
CONSEQUENCES OF, UH, THAT HAVE
REALLY PROVIDED A CRACKS IN OUR
FOUNDATION OF OUR DEMOCRACY.
IT'S A VERY, VERY SERIOUS ISSUE,
AND I KNOW OF, UH FEW THINGS
THAT WE DEAL WITH HERE IN THE
SENATE THAT CAN MATCH THE
IMPORTANCE OF TRYING TO SHORE UP
THAT FOUNDATION. UH, IN THE
YEARS AHEAD. SO WITH THAT WE
WANT TO OPEN UP PUBLIC COMMENT.
ANYONE WHO'S BEEN HERE IN THE
HEARING ROOM. THANK YOU FOR YOUR
PATIENCE. DURING THIS TESTIMONY,
WE WELCOME YOU TO THE MICROPHONE
. PLEASE INTRODUCE YOURSELF AND
WE WE'RE SETTING ASIDE A MINUTE
FOR EACH PERSON. MORNING CHAIR
MEMBERS, PETER BLOCKER WITH THE
CALIFORNIA TAXPAYERS ASSOCIATION
. AND LIKE TO FIRST, THANK YOU,
UM, AND THE COMMITTEE FOR
HOLDING THIS HEARING TODAY,
HAVING THIS OPEN DIALOGUE AND ON
AN IMPORTANT ISSUE AND
APPRECIATE YOUR COMMENTS AND
TAKING THE ISSUE VERY SERIOUSLY.
WE AGREE WITH THE COMMENTS MADE
TODAY BY THE ATTORNEY FROM
GREENBERG TRAURIG. SO ON THE
PROMISE OF DIGITAL ADVERTISING
TAX, SO I WON'T TAKE ANY MORE OF
THE COMMITTEE'S TIME, EXCEPT
THAT THAT OUR ASSOCIATION EVEN
THOUGH IT HAS NOT BEEN A
CALIFORNIA ISSUE YET, UM, HAVING
CLOSELY MONITORING THE AND
FOLLOWING THE MARYLAND TAX AND
THE LITIGATION THERE AND WOULD
CAUTION THE STATE IN ADOPTING A
TAX LIKE THIS WHILE THAT IS
ONGOING, UM, BUT WE LOOK FORWARD
TO CONTINUING THIS DIALOGUE
MOVING FORWARD AND AGAIN. THANK
YOU FOR THE OPPORTUNITY TO
SPEAK. TODAY. THANK YOU. THANK
YOU, SIR. APPRECIATE IT. GOOD
MORNING, STEPHANIE ESTRADA WITH
CREW STRATEGIES ON BEHALF OF
CALIFORNIA BLACK MEDIA IN OUR 30
AFFILIATED BLACK MEDIA OUTLETS,
EACH WHO OPERATE DISTINCTIVELY
AND WITH THEIR OWN BUSINESS
MODELS. UM WE APPRECIATE THE
CHAIR AND THE COMMITTEE'S
ATTENTION TO THIS IMPORTANT
MATTER, AND WE LOOK FORWARD TO
COLLABORATING WITH ALL THE
STAKEHOLDERS HERE TO ENSURE THE
PERSPECTIVE OF BLACK MEDIA
OUTLETS IS HEARD AND VALUED IN
THESE DISCUSSIONS TODAY. THANK
YOU. THANK YOU. MR CHAIR MEMBERS
. SAMANTHA CORBIN, WITH THE
CALIFORNIA TAX REFORM
ASSOCIATION ALSO APPRECIATE THE
CONVERSATION TODAY AND THINK IN
PARTICULAR PANEL, TWO WAS ALUMIN
OF SOME SIGNIFICANTLY BROADER
ISSUES WITH THE STATE'S TAX AND
REVENUE SYSTEM AND ITS
VOLATILITY, PARTICULARLY AROUND
THE FACT THAT THE STATE
CURRENTLY DOES NOT TAX,
INTANGIBLE PRODUCTS OR DIGITAL
SERVICES. AND THAT DISPARITY
CREATES MUCH BROADER PROBLEMS
THAN EVEN JUST THIS, THIS
IMPORTANT ISSUE REGARDING
JOURNALISM AND SO WOULD
ENCOURAGE THIS COMMITTEE TO
EXPLORE THOSE CHALLENGES, EVEN
BEYOND AS A MEANS OF ADDRESSING
SOME OF THE PROBLEMS WE ARE
FACING ACROSS THE BROADER BUDGET
, WHILE AT THE SAME TIME WE DO
HAVE CONCERNS ABOUT SPECIFICALLY
LOOKING AT ADDITIONAL TAX
EXPENDITURES, 40% ON THE DOLLAR
OF WHICH IS A DIRECT CUT TO Kò
THROUGH $14 IN THE STATE AT A
TIME WHERE WE HAVE VERY LITTLE
ADDITIONAL TO LOSE IN THE
BUDGET. THANK YOU. THANK YOU
VERY MUCH AND LOOK FORWARD TO
CONTINUING DIALOGUE WITH YOU AS
WELL. HELLO. GOODBYE MR CHAIR.
MEMBERS OF THE COMMITTEE
BRITTANY BARSOTTI WITH THE
CALIFORNIA NEWS PUBLISHERS
ASSOCIATION. WE'VE BEEN, UH, WE
HAVE AROUND 450 PUBLICATIONS
THROUGHOUT THE STATE OF
CALIFORNIA BEEN SERVING THIS
GREAT STATE SINCE 1888. WELL I
THANK THE CHAIR AND THE
COMMITTEE FOR YOUR INTEREST IN
THIS IMPORTANT TOPIC. THANK YOU.
THANK YOU SO MUCH. LOOK FORWARD
TO PARTNERING WITH YOU AS WELL.
HELLO UH, SCOTT KAUFMAN. HOWARD
DRIVERS TAXPAYERS ASSOCIATION
WAS ALSO A JOURNALIST FOR ALMOST
10 YEARS, SO I VERY MUCH
UNDERSTAND THE PLIGHT. OF LOCAL
NEWS MEDIA. YOU KNOW, WHEN I WAS
A JOURNALIST, I KEPT THE BOX AN
EMPTY BOX UNDER MY DESK. I
CALLED IT MY LAYOFF BOX. I I
FORTUNATELY, NEVER HAD TO USE
IT, BUT UNFORTUNATELY HAD TO
GIVE IT TO MY COLLEAGUES ON A
NUMBER OF A NUMBER OF OCCASIONS
SO VERY SYMPATHETIC TO THE
ISSUE. OBVIOUSLY THOUGH, BEING A
HARD DRIVES TAXPAYERS
ASSOCIATION. WE ARE CONCERNED
WITH ANY NEW TAXES, ESPECIALLY
ONE THAT, UH, TARGETED THAT
COULD BE DEEMED DISCRIMINATORY
COULD RESULT IN I BELIEVE THE
TECHNICAL TERM IS BOATLOAD OF
LITIGATION. AND, UH, AND WOULD
ALMOST WOULD VERY LIKELY BE
PASSED ON TO THE END USER OF THE
CONSUMER, BUT, YOU KNOW, HAPPY
TO DISCUSS ANY ANY, UH ANYTHING.
THANK YOU. THANK YOU VERY MUCH.
I SEE SENATOR UMBERG. YOU'VE
JOINED US. THANK YOU FOR YOUR
PARTICIPATION. I I COMPLIMENTED
YOU EARLIER ON YOUR LEADERSHIP
AND IN THE SPACE THAT YOU'RE
HEARING THAT YOU HELD IN U èC L
A IN DECEMBER. WELCOME TO THE
COMMITTEE. ANYTHING YOU WANT TO
SAY? WELL THANK YOU. CHAIR
GLAZER. THIS IS AN IMPORTANT
ISSUE, ECHOING THE COMMENTS OF
THOSE WHO HAVE ALREADY EXPRESSED
THEIR POINTS OF VIEW. I REGRET
THAT I COULDN'T BE HERE EARLIER.
BUT FOR THE FIRST TIME IN MY 11
YEAR LEGISLATIVE CAREER, I WILL
WATCH THE TAPE. THANK YOU,
SENATOR UMBERG AND APPRECIATE
YOUR ENGAGEMENT ON THIS. ALL
RIGHT, WELL, THAT COMPLETES THE
WORK OF THE SENATE COMMITTEE ON
REVENUE AND TAXATION. I WANT TO
THANK EVERYONE WHO TRAVELED NEAR
AND FAR TO PARTICIPATE WITH US,
AND WE LOOK FORWARD TO THE
CONTINUED DIALOGUE IN THE WEEKS
AHEAD. AND WITH THAT THIS
COMMITTEE IS ADJOURNED.