Wednesday, March 11, 2026
The Honorable Spencer J. Cox
Governor of Utah
Utah State Capitol
350 North State Street
Salt Lake City, UT 84114
Delivered electronically
RE: Senate Bill 287 – Request for Veto
Dear Governor Cox:
On behalf of National Taxpayers Union and taxpayers in Utah and across the country, I respectfully request that you veto Senate Bill 287.
Although the bill seeks to fund important initiatives such as child literacy, youth programs, and mental health services, effective policy requires more than good intentions. SB 287 would introduce a new tax on targeted advertising, based on a business’s gross receipts and apportioned by Utah impressions, in addition to existing taxes.
This is significant because such taxes rarely remain limited to their intended targets. Although the legal obligation falls on advertising platforms, the economic burden is passed on through higher advertising costs, reduced marketing options for small businesses, and ultimately higher prices for consumers. A Deloitte assessment of France’s digital services tax found that 55% of the burden fell on consumers, 40% on business users, and only 5% on the large internet companies targeted.
This is the core issue with SB 287. Although presented as a tax on large digital companies, it would ultimately affect many businesses, including local retailers, startups, service providers, and family businesses that cannot easily absorb higher costs. Utah’s economy depends on people and businesses operating with narrow margins and real risk.
This is especially relevant in Utah, where small businesses are central to the state’s prosperity. According to the U.S. Small Business Administration, Utah has approximately 371,569 small businesses, representing 99.4 percent of all businesses and employing 690,069 people, or 45.4% of the workforce. Increased customer acquisition costs directly affect payroll, expansion opportunities, and ultimately Utah family budgets.
SB 287 is also concerning because it taxes gross receipts from targeted advertising activity rather than net income. This distinction is important. Gross receipts taxes do not account for profitability, economic cycles, or different business models, and apply regardless of margins. Tax Foundation analysts have remarked that digital services taxes are especially problematic because they are imposed on revenue rather than profits, increasing distortion and disproportionately burdening firms with lower margins. Utah has earned a reputation for greater fiscal discipline.
The bill’s structure adds to the concern. SB 287 imposes this tax “in addition to all other taxes,” uses a new impression-based apportionment formula, and leaves important implementation questions to administrative rulemaking by the State Tax Commission. That means compliance costs and legal uncertainty are not side issues; they are part of the policy. Businesses will have to determine how to measure Utah impressions, source activity, document liability, and integrate this new tax into existing multistate reporting frameworks. For large companies, that is costly. For smaller firms operating in the shadow of those pricing decisions, it is consequential.
There is also a philosophical problem here. Utah has succeeded not because it was keen to invent clever new tax instruments, but because it has usually resisted that temptation. The state’s growth has been built on a simpler, steadier promise: work should be rewarded, investment should not be unnecessarily punished, and government should be careful before inserting itself within the mechanisms by which private enterprise reaches customers. SB 287 cuts against that tradition. It narrows the tax base to a politically convenient target while widening the real economic burden to people who had no hand in designing the system and little power to avoid it.
Once a state adopts industry-specific taxes on gross receipts tied to digital activity, it becomes easier to expand such measures. Complexity rises, neutrality declines, and the tax code becomes less stable and more selective. This is not the direction Utah has chosen in the past, and for good reason.
There are also legal and constitutional concerns. States that have enacted digital advertising taxes have confronted major litigation. In August 2025, the U.S. Court of Appeals for the Fourth Circuit found part of Maryland’s digital advertising tax law unconstitutional for violating the First Amendment. While Utah’s bill differs, the larger lesson is clear: digital advertising taxes invite court challenges, create uncertainty, and may require states to defend complex tax regimes in court.
Worthy earmarks should not obscure the main issue. While child literacy and adoption services are important, the question is whether Utah should fund them through a targeted tax that is economically unsound, likely to be passed through, administratively complex, and inconsistent with the state’s pro-growth tax philosophy. We believe it should not.
Families in Utah continue to face elevated costs and uncertainty. Small businesses are making careful decisions about hiring, pricing, and growth. This is not the right time for a tax that will be presented as narrow but felt broadly. A prudent veto would not reject the bill’s goals, but would recognize that tax design matters and that Utah should not compromise its economic model for a revenue idea that is politically attractive but economically unsound.
For these reasons, NTU respectfully asks you to veto Senate Bill 287. We welcome the opportunity to work with your office and legislative leaders on solutions that support children and families without burdening the businesses and households that make Utah strong.
Sincerely,
Mattias Gugel
Director of State External Affairs
National Taxpayers Union