Social media ad taxes would fund local community programs

Businesses would pay a tax on covered social media advertising revenue. Covered revenue would come from U.S.-viewed ads displayed by covered social media platforms using personal data to recommend content. Rates would rise from 10% to 50% on successive portions of covered revenue above an initial $500 million threshold. The tax would apply to tax years beginning after December 31, 2026. Tax-table dollar amounts would adjust for inflation for tax years beginning after December 31, 2027.

The tax would limit which platforms and recommendation systems count. Covered consumer platforms must collect personal data, mainly earn revenue from ads or personal data sales, and mainly host community forums for user-created content. Recommendations using only device type, language, specified broad locations, or age would be excluded. Exceptions would cover searches without other personalization, reasonable safety measures, and chronological feeds of content users selected, followed, or subscribed to. Excluded platforms include those mainly offering shopping, video games, or real-time video calls initiated through a unique link or identifier.

The Department of Housing and Urban Development would award grants using advertising tax receipts. Competitive applicants could include tax-exempt charitable nonprofits and religious or civic nonprofits partly governed, operated, and funded by local residents. Applicants must submit detailed plans explaining how grants would strengthen community life. Seventy-five percent would follow rules similar to the referenced community development grant program. The other 25% would be competitive for local governments, tribes, eligible nonprofits, and groups of these applicants. Money in the fund would remain available until spent.

Grant recipients could spend money on eligible community spaces, programs, and services. Eligible uses would include recreation, community gathering places, and programs teaching responsible technology use or treating social media or artificial intelligence addiction. Funded parks and similar public spaces must be free to community residents; museums and arts venues must be affordable. Religious or civic nonprofits providing funded services must be partly governed, operated, and funded by local residents. Those services must serve all residents and exclude religious worship, teaching, and recruitment.