A proposed tax on digital advertising in New York has small businesses sounding the alarm. Senate Bill S.173, also known as the Digital Ad Tax Act, aims to tax online advertising to fund unemployment programs. But business owners and industry leaders say it will do more harm than good.
Internet for Growth, a national coalition of small businesses, digital creators, and entrepreneurs, has issued an open letter to Governor Kathy Hochul, urging her administration to block the bill. They argue the tax will raise costs, shrink marketing budgets, and limit job growth—hurting the very people it claims to help.
“New York is the world’s advertising and media capital, yet this tax threatens one of its most vital industries,” said Brendan Thomas, Executive Director of Internet for Growth.
The Stakes for Small Businesses
For small business owners, digital advertising is more than just marketing—it’s a way to compete. Unlike traditional media, online ads let businesses target customers without needing deep pockets. A small shop in Albany can reach the same audience as a national chain, leveling the playing field.
Businesses like Curtis Lumber in Saratoga County and Macaluso Wealth Management in Albany use digital ads to attract customers and expand beyond their physical locations. A tax on digital ads could shrink their reach overnight.
The same concerns apply to New York’s growing creator economy. Influencers and content creators rely on ad-supported platforms to make a living. New York City is a global hub for this industry, drawing billions in investment. A new tax could push that money elsewhere.
Hiring Costs Could Go Up
Beyond marketing, digital ads play another key role: hiring. Businesses from startups to major employers use targeted ads to find workers. Raising the cost of recruitment could slow hiring, especially at a time when New York’s unemployment rate remains higher than the national average.
“Taxing digital ads will raise hiring costs, worsening unemployment instead of solving it,” Thomas warned.
Could This Drive Businesses Out of New York?
New York already has some of the highest taxes in the country. Internet for Growth argues that adding another tax—especially one that directly affects businesses of all sizes—could push investment to other states.
If companies can spend their ad dollars in states with lower costs, they will. That means less business for New York’s digital advertising sector, which supports 19% of all advertising jobs nationwide.
On top of that, higher ad costs could trickle down to consumers. Businesses forced to pay more for advertising may have to raise prices on goods and services—hitting New Yorkers already struggling with inflation.
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The Honorable Kathy Hochul
Governor of New York
New York State Capitol Building
Albany, New York 12224
RE: Opposition to Senate Bill S.173 – The Digital Ad Tax Act
Dear Governor Hochul,
On behalf of Internet for Growth, a coalition of small businesses, entrepreneurs, and digital creators who rely on digital advertising to grow and compete, I write to express our strong opposition to Senate Bill S.173. This proposed digital advertising tax would have far-reaching negative consequences for small businesses, job growth, and the economic vitality of New York.
New York is the global capital of advertising and media, with the city’s advertising industry accounting for 19% of all advertising jobs nationwide. Digital advertising is especially critical for small businesses that cannot afford traditional media. Internet for Growth members rely on digital ads for targeted, cost-effective outreach through publishers on the open web, social media, and search engines. Unlike print, radio, or TV, digital platforms allow businesses to launch campaigns for just a few dollars a day, helping them compete with larger brands and grow their customer base.
Businesses across New York, such as Curtis Lumber in Saratoga County and Macaluso Wealth Management in Albany, illustrate how digital advertising fuels economic growth. Curtis Lumber has expanded its reach beyond physical locations, while Macaluso Wealth Management leverages digital marketing to connect with clients needing financial guidance.
Beyond traditional businesses, advertising powers New York’s creator economy, enabling digital influencers and content creators to monetize their platforms, grow audiences, and build sustainable careers. Notably, New York City is one of three global hubs attracting nearly two-thirds of all investment in the ad-supported creator economy, reinforcing the state’s leadership in this rapidly expanding sector. A digital ad tax threatens to stifle this progress, raising costs for businesses and creators alike.
Digital advertising is also a critical hiring tool, helping businesses from startups to large employers find and recruit employees. With New York’s unemployment rate above the national average, raising hiring costs through a digital ad tax could make it harder for businesses to expand their workforce.
New York already bears the highest tax burden in the nation. Adding a digital ad tax would further strain businesses and individuals, potentially driving investment to states with more favorable tax environments.
With slower economic growth, New York must focus on attracting investment and creating jobs—not deterring them. Worse, these costs wouldn’t stop at businesses; they would be passed to consumers, increasing prices for goods and services amid inflation and high taxes. Raising the cost of advertising raises the cost of living.
Rather than undermining a key industry, we urge you to pursue alternatives that foster economic growth while maintaining New York’s leadership in advertising, media, and digital innovation. We appreciate your commitment to supporting New York’s business ecosystem and stand ready to work with your administration on solutions that drive innovation and prosperity without harming small businesses and creators.
Sincerely,
Brendan Thomas
Executive Director
Internet for Growth
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A Call for Alternatives
Instead of adding new taxes, Internet for Growth is pushing for other solutions to boost New York’s economy without hurting small businesses. The group says it is ready to work with the state on policies that support economic growth without driving up costs.
Whether Governor Hochul will listen remains to be seen. But with New York’s advertising and media industry on the line, small businesses are making it clear: this tax is a step in the wrong direction.
For more information, visit Internet for Growth.
