Washington – The Computer & Communications Industry Association is raising concerns ahead of today’s hearing before the Illinois Senate Revenue Committee on SB 3353. The association warns the proposal could increase costs for businesses, discourage investment, and introduce significant legal and economic risks.
CCIA notes that digital advertising is a critical tool for startups and small businesses to reach customers, compete, and grow. The association cautions that raising the cost of these services would make it more difficult for Illinois businesses to scale and succeed in an increasingly digital economy.
The association also raises concerns about the bill’s tax structure. SB 3353 introduces what CCIA describes as an extreme “tax cliff,” where companies that exceed $150 million in in-state digital advertising revenue would face a 10% tax on all such revenue. This approach could create strong disincentives for growth, with even minimal increases in revenue triggering disproportionately large tax burdens.
In addition, CCIA warns that the proposal relies on a gross receipts tax model that applies regardless of profitability. This structure can lead to tax pyramiding, where costs compound across the supply chain and are ultimately passed on to small businesses and consumers through higher prices.
CCIA also highlights potential constitutional concerns, noting that taxes targeting digital advertising may face scrutiny under the Commerce Clause and the federal Internet Tax Freedom Act, which restricts discriminatory treatment of digital commerce.
The following statement can be attributed to Megan Stokes, State Policy Director at CCIA:
“While well-intentioned, SB 3353 takes a fundamentally flawed approach that risks discouraging investment and raising costs across Illinois’ economy. Digital advertising is a critical tool for small businesses, and policies that make it more expensive ultimately hurt the very businesses lawmakers aim to support. The structure of this proposal creates serious economic and legal concerns, including a tax system that penalizes growth rather than encouraging it. We urge lawmakers to reconsider this approach and work toward more balanced, sustainable solutions.”
