How a 1 Percent Ad Tax Could Transform Local News

Lawmakers across the country are increasingly coming around to an undeniable reality: We need policy change to ensure that communities have the news and information they need.

As corporate consolidation and an ever-shifting economic landscape wreak havoc on the journalism industry, more than a dozen states are exploring some kind of legislative action to support local media. And this surge of activity couldn’t come a moment too soon — amid mass deportations, cuts to federal services and democratic backsliding, far too many communities find themselves without the news and information they need to stay safe, connected and civically engaged.

But this political opening raises a natural question: When the stakes are this high, what kind of policy solution should lawmakers be pursuing?

On June 12, the Media Power Collaborative — a national coalition run by Free Press Action — hosted a webinar to answer that very question. With the help of three expert speakers, we issued a bold call to action to lawmakers: Establish independent grantmaking bodies to support local news and informed communities — and back up these grantmaking bodies with a robust source of funding: a 1 percent tax on the advertising revenues of corporate and tech giants. You can check out the full proposal on the Media Power Collaborative’s website.

Speakers included Free Press Action Co-CEO Craig Aaron; Dr. Alessia Zornetta, a UCLA tech-policy expert; and Ayinde Merrill, a program officer at the New Jersey Civic Information Consortium. Together, we broke down the urgency of this moment and the promise of this proposal.

Why now is the time to think big on local-news policy  

The consequences of the collapse of local journalism are becoming more and more clear. Our speakers made the case for why this moment demands big, structural solutions — and why communities, not corporations, should be the ones shaping the future of local news.

“The answer to the crisis facing journalism can’t be giving up, watching it all go away or propping up the dominant corporate outlets that haven’t served communities for a long time,” said Aaron. “We need other answers — direct and targeted funding to support important outlets that are starting and underway, and to be prepared to invest in things that don’t exist yet.”

“There’s a period coming when we’ll be able to reshape the future of public media,” he added. “That won’t be a big window. But we need to be thinking right now about what we want to put on the table.”

Several states are laying the groundwork for this kind of thinking, New Jersey among them. Merrill spoke to the success of the state’s Civic Information Consortium, a first-of-its-kind public-grantmaking body to support local news. Since 2021, the consortium has secured more than $12 million in public funds and supported over 56 projects — many serving rural, BIPOC, Spanish-speaking, and immigrant communities. The consortium’s success has inspired lawmakers in several other states to explore similar efforts. In May, California lawmakers announced the creation of a California Civic Media Fund. 

“We’re seeing people be informed and engaged by empowering hyperlocal news organizations to meet the needs of their communities,” said Merrill. “It’s that simple.”

Why public grantmaking is the best way to strengthen local journalism

There’s a core question at the heart of any policy to support local news: How can lawmakers distribute funding in a way that’s equitable, forward-looking and protective of editorial independence? The strongest answer, as sketched out in our proposal, is to channel funds through an independent grantmaking body.

New Jersey’s Civic Information Consortium is a working model, with strong firewalls in place to ensure that lawmakers have no influence over the grantmaking process. “Grantees have produced over 9,000 stories and nearly 15,000 news briefs,” said Merrill. “Over 1,200 people have been trained — many of them youth and community members. And we’ve supported Documenters programs that pay residents to attend public meetings and take notes.”

Merrill noted that community listening is a key reason for the consortium’s success.

“We start by asking: ‘Where do you get your news? What’s missing? What don’t you trust?’” Merrill said. “From there, we let communities guide us. That might be a social-media page, a website or print. Supporting civic information means letting people tell their own stories in their own way.”

And in deeply polarized times, this grantmaking can be done with bipartisan backing. “Our board is bipartisan — equal appointees from Republicans and Democrats — and all our grants are cycled through the full board,” Merrill said. “We’re transparent about what we’re funding and why, and to date we’ve had consistent cross-party support.”

Why an ad tax is a sound way to fund civic media

Of course, robust public investment in local news requires a robust source of funding. We’ve seen clear evidence of this in New Jersey — for all the success of the consortium, its reliance on the annual appropriations process has introduced unnecessary instability.  

That’s where a tax on advertising comes in, targeted on the wealthiest Big Tech platforms and giant corporations. By taxing the ad revenues of corporate giants — even at an easily shouldered 1 percent rate — lawmakers can take what was once an implicit support mechanism for journalism and turn it explicit. 

“We keep coming back to advertising,” Aaron said. “If journalism is a public good that undergirds our democracy, then why not redirect a small portion of the revenue from companies profiting off our attention and content back into the kind of reporting that communities need?”

“Think about it like pollution or secondhand smoke,” he added. “When our information environment is polluted — when civic discourse is undermined — we can counteract that by having companies that benefit from the chaos fund what communities actually need.”

Zornetta co-authored a paper in 2024 that explored all the various options available to lawmakers working to create public revenue streams for local news. She explained that a general ad tax, applied to the wealthiest corporations and platforms, emerged as the strongest approach.

“Our goal was to give lawmakers a full overview: all the policy options, the legal implications, how to anticipate the challenges,” she said. “A general ad tax avoids many constitutional issues. The economic benefits outweigh the legal risks. California alone could raise $135 million annually.”

“The advertising sector is huge — and right now, those dollars are not being reinvested in our civic infrastructure,” Zornetta added. “Taxation is a way for platforms to contribute to programs that directly address the harm they’ve helped create.”

Looking ahead: a coalition for civic media

Our speakers broke down the scope of work ahead to advance a bold but necessary proposal like ours. 

“To win any fight like this, we need a really big coalition,” Aaron said. “In New Jersey, it wasn’t just journalists — it was educators, city leaders, labor unions, people who care about civic life.”

“This work is hard,” Merrill said. “Sometimes it takes time, months, even years, to build trust in communities. But when people embrace the outlets they helped create, that’s when change happens.”

Interested in participating in conversations like this? Learn more and sign up for the Media Power Collaborative. And watch our webinar below: