A coalition representing hundreds of small businesses across all 435 congressional districts descended on Capitol Hill on May 12 and 13, 2026, to press lawmakers on two converging threats to their marketing budgets: proposed federal privacy legislation that could restrict targeted advertising and a wave of state-level advertising taxes that the coalition warns will push platform costs onto small business customers. Internet for Growth, which organized the event as its fourth annual fly-in during National Small Business Month, brought entrepreneurs and digital creators from across the country to argue that congressional and state-level decisions on privacy legislation are already shaping what it costs to run a small business.
The urgency is grounded in survey data commissioned by the coalition ahead of the fly-in. Internet for Growth surveyed more than 2,400 small businesses and found that SMB advertisers estimated their businesses grew 39 percent over two years because of digital advertising – a figure the coalition is using to frame any restriction on targeted ads as a direct hit to small business revenue, not a neutral policy adjustment.
What the SECURE Data Act and Washington’s Advertising Tax Would Do
The central federal bill in the coalition’s crosshairs is the SECURE Data Act (H.R. 8413), introduced by Representative Joyce of Pennsylvania on April 21, 2026. The bill would replace all existing U.S. state privacy laws with a single federal framework – a structure that Internet for Growth conditionally supports. The coalition’s objection is specific: opt-out provisions for targeted advertising embedded in the bill would reduce the addressable audience for every small business running digital campaigns, including those operating well below the bill’s controller thresholds.
Under current law, small businesses already navigate a patchwork of at least 14 enforceable state privacy laws, each with different consent requirements and data definitions. The SECURE Data Act would consolidate that complexity, but the opt-out mechanism for targeted advertising could offset those compliance gains by shrinking the pool of reachable consumers. The Association of National Advertisers endorsed H.R. 8413 on April 22, 2026, citing 29 million U.S. jobs supported by the advertising industry – framing that aligns with Internet for Growth’s broader economic argument.
On the state side, Washington became the first state to comprehensively tax digital advertising services under a standard retail sales tax framework when it implemented Engrossed Substitute Senate Bill 5814 on October 1, 2025. The tax applies a 6.5 percent state rate to advertising services, plus applicable local rates reaching up to 4.1 percent. Internet for Growth argues that other states are watching Washington’s model and that a wave of similar measures would compound costs for small businesses that depend on paid digital channels.
Why Small Businesses Are Pushing Back Now
Internet for Growth Executive Director Brendan Thomas framed the coalition’s core argument around supply chain pass-through – the structural reality that regulations nominally aimed at large platforms ultimately reach small business customers. “Even when small businesses are exempt from certain requirements, higher costs and restrictions placed elsewhere in the system may be passed down through the platforms, services, and tools they rely on to reach customers and grow,” Thomas said.
That argument is backed by Proximic by Comscore’s 2024 State of Privacy in Advertising Report, which found that 56 percent of surveyed brands, agencies, and publishers already reported facing limitations in audience targeting where state privacy laws were in effect – a preview of what a broader federal opt-out mechanism could produce at national scale. Forty percent of small businesses plan to increase marketing spend despite economic pressures, making the cost and reach implications of these bills particularly consequential for owners already stretching limited budgets.
Ben Wolfgram, co-founder of BenShot, a Wisconsin-based glassware company, described how digital tools enabled the business to scale nationally. “What started as a father-and-son project grew into a nationwide business because we can reach interested customers online in affordable and effective ways,” Wolfgram said. “Some proposals would make it harder for businesses to use ordinary advertising data to reach people interested in their products.”
Voter research commissioned by Internet for Growth and conducted by Echelon Insights on a sample of 1,030 likely voters surveyed September 5 to 7, 2025 – with a margin of error of plus or minus 3.4 percentage points – found that 94 percent of voters say digital tools are essential for small business survival and 78 percent opposed new taxes and regulations on digital advertising. Notably, Trump voters and Harris voters showed nearly identical levels of opposition, a cross-partisan alignment the coalition is presenting as evidence that the political cost of imposing new restrictions is broadly distributed across the electorate.
What This Means for Small Business Owners in Practice
In practice, a 6 to 10 percent increase in platform costs from advertising taxes – the range Internet for Growth cites – would not simply compress margins. For businesses with thin margins or localized customer bases, it would push some campaigns below the threshold of economic justification entirely, eliminating the channel rather than merely making it more expensive. State-level advertising tax proposals modeled on Washington’s framework present a compounding risk: each additional state that adopts a similar measure adds another layer of cost to the digital advertising supply chain that small businesses access through national platforms.
The SECURE Data Act’s opt-out mechanism for targeted advertising presents a parallel structural problem. If widely adopted by consumers, it would reduce targeting precision across every digital campaign – an effect that falls hardest on small businesses that lack the budget scale to compensate for audience shrinkage through higher spend. Connecticut has taken a different approach, advancing legislation that would use tax credits to help small businesses offset advertising costs – a contrast that illustrates the range of state-level policy directions now in play.
The coalition is also raising artificial intelligence as a policy concern, arguing that AI-enabled advertising and marketing tools are becoming central to how small businesses compete without large teams or budgets – and that poorly designed regulation or taxation could price smaller businesses out of those capabilities, leaving advanced tools available only to better-resourced competitors.
Where the Bills Stand and What Comes Next
The SECURE Data Act has been referred to committee following its introduction on April 21, 2026, with no markup scheduled as of the fly-in dates. Its preemption scope and the opt-out language for targeted advertising are expected to be the primary flashpoints in any committee review. A separate bipartisan Senate bill, the AMERICA Act, reintroduced on March 13, 2025, would prohibit companies with more than $20 billion in annual digital advertising revenue from simultaneously operating multiple supply chain layers, a structural change that could alter the programmatic infrastructure small businesses rely on to buy digital ads efficiently.
Internet for Growth’s fly-in meetings spanned a bipartisan set of Senate and House offices, including those of Senators Chris Coons, Cory Booker, Tammy Baldwin, and Lindsey Graham, as well as Representatives Jim Clyburn and Frank Pallone. Whether the SECURE Data Act advances – and in what form – will depend on committee scheduling and whether advocates can sustain pressure through ongoing congressional deliberations on the national privacy framework.