Rescuing Local News Through Tax Credits:
A review of policy in the U.S. and Canada
Issie Lapowsky and Jason White
2
Rescuing Local News Through Tax Credits: A review of North America’s approaches
About the Center on Technology Policy
UNC’s Center on Technology Policy (CTP) seeks to craft public policy for a better internet. Utilizing an
interdisciplinary academic framework, CTP works to identify knowledge gaps and develop actionable policy
frameworks that will enable us to realize the potential benefits of technology while minimizing its harms. By
working closely with students and expanding the University’s offerings in technology policy analysis, we seek to
cultivate and train the field’s future practitioners.
About the authors
Issie Lapowsky is a research fellow at the Center on Technology Policy. She is also a journalist, covering the
intersection of technology, policy, and national affairs.
Jason White is a research fellow at the Center on Technology Policy. He’s a technology executive and a member of
the board of trustees for his town’s local nonprofit news organization, the Montclair Local.
Acknowledgments
This report was wholly funded through the support of the John S. and James L. Knight Foundation. As noted in
the Center’s ethics statement, the substance of the Center’s work is independent from its funders. The report’s
findings and recommendations are the authors’ own. We would also like to thank Rebuild Local News for helping
with our research.
3
Rescuing Local News Through Tax Credits: A review of North America’s approaches
Executive Summary
Lawmakers in the U.S. and abroad are looking for policy solutions that will bring new sources of
funding into the long flailing news industry, which has suffered from decades of consolidation,
competition from new forms of media, and, more recently, the rise of digital platforms.
Internationally, Australia has already implemented its News Media Bargaining Code, requiring
large platform companies like Meta and Google to pay for news content, and Canada is
currently considering a version of it. In the U.S., New York City is requiring local government
agencies to spend a portion of their advertising budgets on local media. And in New Jersey, the
state created a nonprofit consortium to distribute public funding to local newsrooms and other
community organizations.
One other set of ideas for boosting the news industry that’s been gaining ground at both the
state and federal level in the U.S. is tax incentives. Congress pursued this approach through
the Local Journalism Sustainability Act, which would have provided payroll tax credits to
local newsrooms, subscription tax credits to individuals, and credits for small and mid-sized
businesses that advertise with local media. While that bill ultimately failed to pass, elements
of it are likely to be reintroduced. In the meantime, at least seven states, from New York to
Oregon, have pursued tax levers for news in one form or another. Though none have passed yet,
supporters said they also are likely to be revived in future legislative sessions.
To evaluate how tax incentives might work at the state and federal level in the U.S., we
explore the example set by Canada, which recently enacted this approach. In 2019, the
country announced a $595 million plan to fund the news industry through three different tax
interventions: a labor tax credit, a subscriber tax credit, and a new quasi-charitable status for
nonprofit newsrooms.
This report provides an overview of journalism tax measures that have been proposed in the
U.S., a deep dive on Canada’s tax credits for journalism, and an analysis of their impact and
shortcomings. We also provide a set of six recommendations, based on Canada’s experience, to
inform U.S. policymakers pursuing tax strategies to support local news:
1. Structure payroll tax credits with the smallest newsrooms in mind.
2. Implement subscription tax benefits at the point of sale.
3. Impose transparency measures to allow for public accountability.
4. Experiment with different tiers of credits for employee retention and growth.
5. Continue to prioritize local news over national.
6. Provide tax credits for local news advertisers.
We present tax credits not as a cure all or substitute for other legislative initiatives aimed
at uplifting the news industry, but as an idea worthy of experimentation. Efforts to support
healthier information ecosystems at the local level have implications for many stakeholder
groups, from lawmakers to tech platforms to news producers to consumers.
4
Rescuing Local News Through Tax Credits: A review of North America’s approaches
For much of the 20th century, local news organizations
in the U.S. operated from a position of economic
strength. They had healthy businesses that were built
around the fact that they owned or were significant
parts of the means of information distribution in
their communities. This enabled them to build robust
advertising and subscription businesses, which helped
fund the journalism that they produced.
Then came a cascade of disruptions. The rise of
television and radio brought new competition to the
space. Deregulation and market pressures increased
concentration (Franklin & Murphy, 1998, p. 2). Social
trends began to undercut the centrality of local
communities (Nielsen, 2015, p. 5). And the growth
of the consumer internet in the 1990s and beyond
fundamentally changed the market. Once consumers
could access news and information from anywhere at
any time, the market position of local media was greatly
affected, with devastating impacts on local newspapers
in particular, according to the U.S. Census Bureau’s
Service Annual Survey. No longer were local news
organizations the dominant way for consumers to get
information about their community, and no longer were
they the main vehicle through which local advertisers
could reach their customers.
Local newsrooms struggled to replicate their success
online, due in no small part to the relatively low cost
of digital ads compared to print ads. While cheaper
ads were good for consumers and businesses, they hit
the bottom line for local news, according to a study
from Management Science. A growing share of news
organizations were bought by private equity firms over
this period, which led to less coverage of local civic
institutions and a decline in the number of reporters
and editors, according to a working paper from the
National Bureau of Economic Research. All of this led to
a steady slide in the economic prospects for local media
and local journalists, as news organizations cut back
and consolidated.
The changes in the local print media landscape in the U.S.
have impacted news distribution, economics, and labor:
• Circulation: Weekday circulation of daily
newspapers in the U.S. topped out at 63,340,000 in
1984, according to data from Pew Research Center.
That figure dropped by 61% to 24,299,333 in 2020,
despite a growing U.S. population.
• Revenue: Ad revenue reached its peak later than
circulation, hitting a high of $49 billion in 2005.
It dropped to an estimated $9.6 billion in 2020,
Pew found.
• Journalists: As the economic prospects for local
media suffered, so did employment for local
journalists, according to Pew: from a high of 74,410
newsroom employees in 2006 to 30,820 in 2020.
Over this same period, roughly one quarter of
America’s newspapers closed entirely, according to a
report from Penelope Muse Abernathy, a professor of
journalism at Northwestern University, and many of
the remaining 6,700 newspapers are what she calls
“ghost newspapers.” That means they are still printed
and distributed and still have advertising, but there is
no longer any or much local content. (The research
was published while Abernathy was at the Hussman
School of Journalism and Media at UNC.) This decline
coincided with an increase in ownership by private
equity and hedge funds and consolidation into fewer
companies. Consolidation has been shown to have a
negative impact on local coverage.
Various studies have shown that when local news
coverage decreases or disappears in a community,
the impacts can be profound for the health of that
community:
• Participation in local elections declines as local
reporting takes up a small share of the news that is
covered, according to a National Bureau of Economic
Research study.
• Citizens’ political knowledge and participation
declines in concert with a decline in local news,
according to a study in the University of Chicago’s
Journal of Politics.
• The closure of newspapers leads to higher
borrowing costs for communities, according to a
Brookings Institution study.
• Corporate misconduct in an area goes up when
newspapers close, according to a paper in the
Journal of Financial Economics.
Background:
The decline of local news, and recent policy approaches
While the situation is dire, there are areas of promise.
Some entrepreneurs have started new digital-first
newsrooms in their communities, such as Richland
Source in North Central Ohio and Lookout Local in
Santa Cruz, CA. But these outlets are typically much
smaller than what they replaced, and like other kinds
of startups, they don’t all succeed. Nonprofit news
organizations, which are nonprofits that provide news
coverage as a public service, have seen significant
growth as well, with 184 nonprofit news organizations
currently focused on local journalism and another 104
split between state and regional coverage, according
to the Institute for Nonprofit News. Still there is no
question that a yawning gap remains between the
amount of community journalism produced two
decades ago and what is produced today.
Policy Approaches
In recent years, the decline of local news has caught the
eyes of industry advocates and lawmakers in the U.S.
Legislative remedies have included:
• The Journalism Competition and Preservation Act,
which would force large digital platforms to pay
for the news they host or link to. JCPA has been
introduced in multiple congressional sessions.
In June of this year, it passed out of the Senate
Judiciary Committee.
• The California State Assembly passed legislation
that requires platforms to pay a news usage fee to
news organizations in the state.
• Washington and California both approved fellowship
programs to place recent graduates with news
organizations.
Lawmakers also have increasingly considered using
tax levers to improve the economic prospects for local
media. The primary legislative vehicle for this approach
in the U.S. has been the Local Journalism Sustainability
Act. The bipartisan House version of the bill was first
introduced in 2020 by Reps. Ann Kirkpatrick (D-AZ)
and Daniel Newhouse (R-WA). It was reintroduced
the following year, along with a Senate version of the
bill, introduced by Commerce Committee Chair Maria
Cantwell (D-WA) and fellow Democratic senators Ron
Wyden (D-OR) and Mark Kelly (D-AZ).
The bill, which we will outline in further detail below,
took a three-prong approach to propping up local news
through a payroll tax credit for local newsrooms, a
subscription tax credit for individual taxpayers, and a
tax credit for businesses that advertise with local news
organizations. The House version of the bill had 77
co-sponsors across party lines, and the legislation more
broadly received support from major industry groups
like the News Media Alliance, as well as smaller public
interest groups, like Report for America. But the bill
ultimately died in committee.
Now, states across the country, including Wisconsin,
New York, and Virginia, are pursuing pieces of that
bill on a more local level. Publishing associations and
advocacy groups say they expect new federal legislation
as well, with elements of the LJSA folded into it. As
U.S. lawmakers consider ways to support the news
industry through the tax code, they can develop a better
understanding of the costs and benefits of this policy
mechanism by studying how it has worked in practice.
They should look to Canada for guidance, where the
country is already engaged in an ambitious experiment
in using tax credits to fund journalism.
5
Rescuing Local News Through Tax Credits: A review of North America’s approaches
6
Rescuing Local News Through Tax Credits: A review of North America’s approaches
Our Research and Key Questions
In this paper, we explore tax measures not as a panacea
for the decline in local news or as a replacement for
other policy approaches, but as one way lawmakers
might be able to improve the prospects for local media.
We are focused on tax measures for a few reasons:
1. Tax policy proposals are actively being considered
by policymakers. They have already been introduced
in Congress and state legislatures and are likely to
be reintroduced in revised form.
2. They have already been implemented in other
jurisdictions, so we have the opportunity to examine
how they work in practice. Canada provides a real
world example to gauge their impact.
3. Because tax policy touches every business, no matter
how small, these credits are scalable to the hyperlocal
level in ways that other policies may not be.
Through interviews and roundtable discussions with
publishers, advocacy groups, think tanks, industry
experts, and lawmakers, as well as a review of relevant
government data and legislation, we sought to answer
three questions:
1. What are the features and challenges of U.S. tax
policy proposals aimed at strengthening local
news?
2. What impact have Canada’s journalism tax credits
had on newsrooms?
3. How could lawmakers learn from Canada’s
experience to improve the journalism tax credit
model?
7
Rescuing Local News Through Tax Credits: A review of North America’s approaches
At both the state and federal level, there are three main
tax incentives that have been under consideration.
In Congress, the policies are wrapped together in
the Local Journalism Sustainability Act (LJSA). The
state proposals typically include one or two of these
measures, and lawmakers are currently working on a
revamped version of LJSA, which could also include
some of these measures.
The tax changes that would benefit local news
organizations, as laid out in the LJSA, include:
1. Tax credits for individuals who subscribe to
a publication.
• Goal: To incentivize more people to purchase
subscriptions by lowering the cost of subscribing. If
successful, this would accelerate growth in a part of
the publishing business – digital subscriptions – that
is already growing.
• How it would work: A subscriber would receive a tax
refund for 50-80% of the cost of a subscription, up to
$250 refund per year.
2. Refundable tax credits for publishers who
hire journalists.
• Goal: To enable local news organizations to retain
newsroom employees or hire new ones by lowering
the cost of employing journalists.
• How it would work: The credit is for 50% of an
employee’s salary up to $50,000 in compensation in
the first year, so a newsroom may claim a maximum
credit of $25,000 per employee. In subsequent years,
the value of the credit is reduced to 30%, reducing
the maximum credit to $15,000.
3. Tax credits for local businesses that advertise with
local media.
• Goal: To encourage small businesses to direct more
of their spending on ads to local media, as opposed to
other potential ad vehicles, such as digital platforms.
• How it would work: The credits would go to small
businesses of fewer than 50 full-time employees
that buy advertisements in their local media outlets,
whether print, digital or TV and radio. The credit
is worth up to 80% of a company’s advertising
costs with local media in the first year and 50% in
subsequent years. The credit is capped at $5,000 in
the first year and $2,500 in following years.
The payroll and subscription tax credits would apply
only to local newspapers, defined as print and digital
publications that meet the following four criteria:
• The primary content is original content.
• The publication serves the needs of the local
community or region.
• The publication employs at least one journalist who
lives in that community.
• The publication employs no more than 750 people.
The advertising tax credit would apply to local
broadcast TV and radio, as licensed by the Federal
Communications Commission, and also print and digital
publishers as defined above.
One of the core elements of the LJSA – the payroll tax
incentive for newsroom employees – had a chance of
passage when it was included in the Build Back Better
plan. When that plan stalled, so too did the LJSA.
As federal legislation seemed less likely, publishers
and industry associations shifted their attention to
getting individual pieces of the legislation approved in
different states. Rather than try to pass all three tax
credits at once, state lawmakers have been taking more
targeted approaches, according to Rebuild Local News,
a nonprofit organization that advances policy solutions
to revitalize community journalism. The chart below
outlines tax reform proposals that have been introduced
by state lawmakers in recent years. None of the policy
proposals described below have been passed by state
lawmakers as of the date of this report.
Overview of U.S. Tax Incentive Proposals
8
Rescuing Local News Through Tax Credits: A review of North America’s approaches
State Policy Details Link
Colorado
Subscription
tax credit, and
advertising tax
credit
Credit equal to 50% of the amount paid to a local
news organization in the form of a subscription or
donation, with the credit capped at $250.
Advertising tax credit equal to 50% of a small
business’s advertising spending with local
broadcasters or newspapers, with the credit
capped at $2,500.
Link to legislation
Maryland
Advertising
tax credit
Credit for small- and medium-sized businesses of
fewer than 50 employees that advertise through
news media based in the state. The credit is
capped at $1,000 for the first year and $500 in
subsequent years.
Link to legislation
Massachusetts
Subscription
tax credit
Credit up to $250 for paid subscriptions to one or
more local community newspapers.
Link to legislation
New York Payroll tax credit
Payroll tax credit payable to news organizations
for newsroom employees up to 50% of $12,500 in
wages each quarter.
Link to legislation
Oregon
Subscription
tax credit
Credit for the cost of subscriptions to local or
regional publications. Credit capped by income of
the taxpayer.
Link to legislation
Virginia
Payroll tax credit,
and advertising
tax credit
Tax credit for 10% of wages paid to local news
journalists up to $5,000, and in subsequent years,
the lesser of 5% of wages or $2,500.
Local advertising tax credit of 80% of the
amounts paid for qualified local media advertising
expenses, capped at $4,000. The credit would
decrease in subsequent years.
Link to legislation
Wisconsin
Advertising
tax credit
Local advertising tax credit for 50% of a
business’s advertising expenditures, limited to a
credit of $5,000. Businesses with fewer than 100
full-time employees and under $10,000,000 in
revenue would be eligible.
Link to legislation
Table 1: State-level tax credit proposals
9
Rescuing Local News Through Tax Credits: A review of North America’s approaches
The Wisconsin legislation, which includes a version
of the advertising tax credit, is being sponsored by
state Rep. Todd Novak, a Republican and former
newspaper editor. In an interview, Novak said he
saw an opportunity to help small businesses market
themselves while also improving ad revenue for local
publishers. He also liked the politics of this policy,
saying he could build a broad coalition behind it,
because the credit would go to all kinds of small
businesses, not just news organizations.
“The most powerful lobbying group in the state of
Wisconsin is the tavern league,” said Rep. Novak.
“And they jumped on board, and it really caught
people’s attention.”
A downside of this big tent approach is that it can be
expensive – initially estimated at $50 million for this
legislation. Rep. Novak said he made changes that
brought it down to $40 million, which was still too
expensive for many. As of June 23, the bill had not
moved out of committee.
In New York, Assemblywoman Carrie Woerner, a
Democrat, has advocated for a refundable tax credit for
news organizations that retain or hire local journalists.
“At our local board meeting, it goes from three or four
news outlets, printed newspaper outlets, sending
reporters to city council meetings and town board
meetings, to nobody covering city councils and town
board meetings. And I don’t think that that’s good for
democracy,” she said in an interview.
Like in Wisconsin, cost has been one of the main areas
of concern for the New York legislation, which came
with an estimated price tag of $150 million. Within the
news industry, one of the key discussion points around
the legislation was who would benefit from it and by
how much. The draft legislation ultimately included a $1
million per newsroom limit – which could still result in
sizable payouts for chains and private equity firms that
own multiple newsrooms.
From New York to Congress to Canada, who benefits is
a key question that can pit legacy news organizations
against digital startups, newspapers against
broadcasters, large companies against small ones.
Typically a more expansive vision has resulted in more
political support as it helps generate a larger coalition in
support of the legislation.
But that doesn’t mean everyone agrees it is the best
way to spend limited taxpayer funds.
“They shouldn’t be helping those that are making
millions and millions of dollars,” said Elinor Tatum,
publisher of New York Amsterdam News, which is
based in Harlem. “Should there be a company that’s
making $20 million a year being able to get these
credits? No, I don’t think that’s reasonable.”
Challenges to Implementation
There are three main areas of pushback that advocates
for tax incentives to support local news have faced at
both the state and federal level in the U.S.:
1. Cost and prioritization: Tax credits and incentives
mean forgoing revenue for the government
that is implementing them. For example, the
federal payroll tax credit alone would have cost
an estimated $1.67 billion. As state and U.S.
lawmakers consider all of the needs of the voters
they represent, interview subjects reported it has
been difficult for news organizations to make the
case that they are a higher priority than any other
constituency. This is one reason why legislation
like the Journalism and Competition Preservation
Act — which requires digital platforms to pay for
news content they host — can be attractive to
lawmakers, as it wouldn’t directly hit government
budgets like tax incentives would.
2. Partisanship: While many Republicans have
endorsed policy changes to support news at both
the state and federal level, such policies have
been more often associated with Democrats.
Trust in media among Republicans hovers around
14%, according to Gallup, compared to 70% for
Democrats. This means that the policies can be
caught up in partisan fissures, at a time when those
fissures are deeper than ever.
3. Role of government: There is a deep strain of
skepticism in the U.S. about government funding of
news organizations, particularly among Republicans.
Because tax credits do not involve a direct
government investment in news, they are potentially
a way through this skepticism. Nonetheless,
advocates for news sustainability policies face the
unique challenge of convincing some lawmakers
that public policy tools should be used in news –
nevermind what the right approach might be.
10
Rescuing Local News Through Tax Credits: A review of North America’s approaches
Four years ago, Canada changed its tax code to provide
incentives aimed at improving the sustainability of news
organizations. Here, we explore the evolution of the
policy, its implementation, and lessons learned.
In 2017, the Ottawa-based think tank Public Policy
Forum published a 108-page report, titled The Shattered
Mirror, painting a bleak picture of Canadian newsrooms’
worsening reality. The report had been commissioned
by the Canadian government, which was growing
increasingly interested in the decline of media and its
impact on democracy.
Between 2006 and 2015, revenue for Canadian daily
newspapers had declined by 40%. The report also
pointed to data from the Canadian Media Guild, showing
that waves of layoffs had led to 12,000 lost media jobs
by 2016, 1,000 of which had disappeared in the year
leading up to The Shattered Mirror’s publication. Polling
conducted by Public Policy Forum for The Shattered
Mirror report found that the majority of Canadians
viewed the potential collapse of the industry as a threat
to a functional democracy.
The following year saw a nationwide discussion about
whether and how the government could financially
support local news. This momentum culminated in the
creation of a $595 million plan, introduced in Canada’s
2019 budget, to support both national and local news
organizations through three new tax measures. The goal
of the measures was to boost newsroom investments in
journalists, incentivize consumers to subscribe to news,
and increase donations to nonprofit newsrooms.
Those measures include:
• A refundable labor tax credit: Qualified Canadian
Journalism Organizations (more on QCJOs below)
can receive a refundable tax credit amounting to
25% of their employees’ salaries or wages. The credit
is capped at a $55,000 CAD salary, meaning the
maximum credit is $13,750 CAD per employee per
year. These employees must spend at least 75% of
their time on “original written news content.” This
credit is similar to, but smaller than, the payroll tax
credit proposed in the U.S.
• A digital news subscription income tax credit: Individuals
can claim a 15% income tax credit on up to $500
CAD worth of digital subscriptions to QCJOs,
amounting to a maximum credit of $75 CAD annually.
This credit applies only to “primarily written news.”
It is similar to the subscription tax credit proposed in
the U.S., except it is smaller and only applies to digital
subscriptions.
• A new “qualified donee” status: Nonprofit newsrooms
that are designated as QCJOs and also meet certain
additional eligibility criteria can become Registered
Journalism Organizations (More on RJOs below).
RJOs receive benefits similar to charities, including
income tax-exempt status, the ability to accept gifts
from registered charities, and the ability of donors
to get tax write-offs on their contributions. This is a
new category for newsrooms in Canada. In the U.S.,
newsrooms can already be nonprofits (for instance,
the Texas Tribune is a nonprofit).
While it is not the focus of this paper, it’s worth noting
that, in addition to these tax incentives, the government
also set up a five-year, $50 million program called
the Local Journalism Initiative, which pays for the
deployment of journalists in underserved communities.
Criteria for Qualified Canadian
Journalism Organization (QCJO)
and Registered Journalism
Organization (RJO) Status
Key to distributing these tax credits was figuring out
which news organizations would actually qualify. To
figure that out, the Canadian government convened an
eight-member panel, composed of a cross section of
media organizations, to come up with a list of criteria for
Qualified Canadian Journalism Organizations (QCJO).
The final list of criteria is long, but requires, among
other things, that QCJOs must:
• Be corporations, partnerships, or trusts that are
based in and operational in Canada.
• Produce original news content.
• Cover general interest topics and current events.
• Adhere to journalistic processes and principles,
including, among other things, verifying information,
offering a right to rebuttal, and correcting errors.
• Employ two or more arm’s-length employees,
meaning they are not related or married and
generally have separate interests.
The Canada Experience
11
Rescuing Local News Through Tax Credits: A review of North America’s approaches
The Canada Revenue Agency is in charge of
administering QCJO status. But in order to limit the
number of judgment calls the government would make
single-handedly, it also set up an independent advisory
board of journalism experts to review applications.
Once a news organization has been approved as a
QCJO, it can also apply for income tax-exempt status
as a Registered Journalism Organization (RJO). These
organizations must meet additional criteria, including,
but not limited to:
• Operating exclusively for the purpose of
creating journalism.
• Not accepting gifts from one source amounting to
over 20% of revenue in any given year.
• Not giving any part of their income to a single
individual for their personal benefit.
Criticisms: Accusations of
political bribery and favorship
of legacy media
This intervention by the Canadian government hasn’t
been without controversy. Even before these tax
measures were introduced, Public Policy Forum noted
in its Shattered Mirror report that “we encountered
resistance to the very notion that public policy be
applied to the news.” That report answered such
criticism by noting Canada’s already long record of
government involvement in journalism. To protect
national media from foreign competition, Canada has
given Canadian businesses a tax break for advertising
in Canadian media. And the Canadian Broadcasting
Corporation is wholly owned by the government, though
it operates independently.
Still, with the Liberal party supporting the proposals,
Conservatives accused the Liberals of trying to buy the
media’s favor. “What Justin Trudeau is telling you is:
Here’s a half billion dollars; don’t bite the hand that feeds
you,” Conservative party leader Pierre Poilievre told
reporters in 2018.
But the critiques of the tax credit approach weren’t
purely political. The package quickly came to be referred
to as a “bailout” for legacy newspapers, including
major publishers like Torstar and Postmedia, the latter
of which is majority-owned by the New Jersey hedge
fund Chatham Asset Management. Critics pointed to a
meeting between “press barons,” including Postmedia’s
CEO Paul Godfrey, as evidence that incumbent players,
responsible for so many journalism layoffs, were using
the policies to enshrine the power of legacy newspapers
to the detriment of smaller upstarts. News Media
Canada, a top industry trade association, was also
represented on the panel that drafted criteria for QCJOs.
Much of the criticism came from leaders of startup
newsrooms, including Jesse Brown, publisher and editor-
in-chief of the podcasting company Canadaland. Brown
denounced the exclusion of audio and video journalism
and the requirements that newsrooms have at least
two employees and cover general interest topics to
qualify. “I launched Canadaland solo & did it part-time
for a year before I started hiring. The bailout could have
encouraged dozens more individuals to do the same, but
explicitly excludes them instead,” he tweeted in 2019
when the QCJO guidance was released.
Others, like Erin Millar, then CEO of Discourse Media,
which has benefitted from the tax credits, objected to
the idea that there was no cap on the amount of money
a single publisher could collect, meaning giant media
conglomerates could accumulate unlimited tax credits
for employing journalists one year, then lay them off the
next. Millar put forward her own set of proposals, but
was ultimately disappointed with where the government
landed. “My view is that this sort of propped up and held
in place an old model, because people are really scared of
change,” said Millar, who is now CEO of Indiegraf Media.
“I think it’s inevitable, and so we shouldn’t be delaying
that, but we should be making investments in the future.”
Successes and failures of
implementation
The three prongs of Canada’s approach to tax incentives
for journalism have had varied levels of success. We
consider each of them individually.
1. Labor tax credit: The credit has resulted in tax
savings for both large and small publishers. Last year,
Postmedia reported receiving $8.3 million over the
course of the year from the credit. We interviewed
smaller publishers to understand the impact of the tax
credit on their revenue. Village Media, which runs a
network of hyperlocal newsrooms; The Tyee, a nonprofit
newsroom based in Vancouver; and The Narwhal, a site
devoted to environmental news, reported generating
5-10% of their revenue from the labor tax credit. All
three publications said the credit has increased their
ability to hire.
12
Rescuing Local News Through Tax Credits: A review of North America’s approaches
As Jeff Elgie, CEO of Village Media, put it, “It’s
impossible to say that it has not made a significant
positive impact on us.”
“It’s definitely been meaningful for us,” said Jeanette
Ageson, publisher of The Tyee. This year, Ageson
expects to claim $200,000 in credits, which amounts
to approximately 10% of the publication’s roughly $2
million budget.
Even some of the program’s critics, including Millar of
The Discourse, say their newsrooms have benefited.
According to the most recent data reported by the
Canada Revenue Agency, about 440 individuals and
100 corporations claimed the credit in 2020.
But the implementation of the program hasn’t been
without issue. Some of the hurdles we identified include:
• Resource constraints on Advisory Board: The QCJO
approval process is a highly manual one that often
requires the Advisory Board to thoroughly read the
news outlets they’re judging to determine if they do
original reporting, adhere to journalistic standards,
and meet other criteria for qualification. This is a
time consuming process for a Board that is currently
understaffed; the Board is supposed to have seven
members, but currently has just four. Complicating
matters, the Board is sometimes called upon to
assess media outlets written in languages that none
of the Board members understand.
• Delays in funding disbursement: The goal of the labor
tax credit is to help newsrooms invest in hiring and
retaining journalists. But for small organizations with
limited cash flow, it has been challenging to plan for
new hires when there is a gap between hiring and
reimbursement.
• Exclusion of audio and video journalists: The Canada
Revenue Agency stipulates that QCJOs can only
claim tax credits for newsroom employees who
spend “at least 75% of their time engaged in the
production of original written news content,”
excluding journalists who produce audio or visual
journalism, without accompanying text.
• Lack of transparency: One reason for continued
skepticism about the labor tax credit is the limited
public visibility into who’s benefiting, how much has
been spent on the program, and whether it’s actually
creating net new jobs amid industry layoffs.
• Funding limitations: According to Glassdoor, the
average salary for a journalist in Canada is around
$55,000 CAD, which is the salary cap set under
the labor tax credit. But because many journalists
make more than that, groups like News Media
Canada told us they are pushing to raise the salary
cap to $85,000 CAD. In an interview, News Media
Canada also expressed concerns that newsrooms
that accept other forms of government funding,
including a postal subsidy for print publishers, have
to deduct that funding from whatever they receive
from the labor tax credit. Those deductions reduce
the amount that publishers actually collect from the
labor tax credit.
13
Rescuing Local News Through Tax Credits: A review of North America’s approaches
2. Digital subscription tax credit: Interviews
with experts and data released by the Canadian
government suggest this credit has been largely
unsuccessful in driving new subscribers to
publications and is even viewed by some as a giveaway
for affluent individuals who already subscribe to news.
One independent publisher in our interviews described
the program as “a flop.”
The credits apply to subscriptions to publications
produced by nearly 200 news organizations.
According to the Canada Revenue Agency, just 1% of
tax filing Canadians applied for the credit in 2020. The
Reuters Institute for the Study of Journalism, which
tracks digital news subscriptions in Canada, has shown
a slight increase in Canadians who say they subscribe
to digital news —from 13% in 2021 to 15% in 2022 —
but digital subscriptions have been growing worldwide,
making it impossible to attribute the growth in Canada
to its tax incentives.
Some of the hurdles we identified include:
• Gap between point of sale and reimbursement:
People who already subscribe to qualified news
organizations may be happy to claim a small credit
when they file their taxes. But new subscribers do
not receive an immediate reimbursement when they
subscribe to a new publication. They may not even
know about the existence of the tax credit when they
are considering purchasing a subscription.
For the tax incentive to convert someone to a
paying subscriber, that person must know about
the tax program at the point of sale and must
see that future reimbursement as an incentive
to subscribe. That structure requires substantial
forward thinking from individuals who may already
be reluctant to pay for news.
• Size of benefit: The benefit is just 15% of a
subscription price. Even for a major daily
newspaper like The Toronto Star or The Globe and
Mail, that amounts to less than $20 CAD in credit.
The credit is also capped at $75 CAD, limiting its
benefit for subscribers to multiple publications. A
small benefit likely correlates to a small incentive
to purchase a new subscription.
• Exclusion of video and audio news: The benefit
applies only to publications that produce “primarily
written news,” preventing audio and video-based
publications from offering the credit to subscribers.
3. Qualified donee status: To date, there are nine
Registered Journalism Organizations that can
issue donation receipts to contributors and accept
charitable funding. For those few organizations,
opening up a new lane of revenue that didn’t exist
before, coupled with income tax savings, has been
positive.
One nonprofit newsroom, The Narwhal, reported in
2021 that in its first week after becoming the country’s
first English language RJO, nearly 300 readers became
paying members and more than 230 existing members
increased their donations.
And yet, the fact that just nine publishers are RJOs
speaks to the program’s challenges. Some of the
hurdles we identified include:
• Cap on funding from single source: RJOs may not
accept more than 20% of their revenue from any
single funder, a stipulation that’s meant to prevent
what one publisher referred to as “the Elon Musks
of the world from buying a soapbox” and then
receiving a government subsidy.
But this restriction has also prevented nonprofit
newsrooms like The Tyee from getting registered.
The Tyee is predominantly member-funded, but it
still accepts more than 20% of its funding from a
single donor. “Our major donor frontloaded a lot
of cash for many years to help us scale, and now
he’s working his way down, but it looks like we still
might be a year or two away from being at that
level,” Ageson of The Tyee said.
• Limited market for philanthropic funding of news:
Because journalism wasn’t previously considered a
philanthropic cause in Canada, the country doesn’t
have as robust a network of journalism-focused
philanthropists as the U.S. does. This is less a
design flaw of the policy than it is a challenging
market reality.
14
Rescuing Local News Through Tax Credits: A review of North America’s approaches
The future of Canada’s
journalism tax credits
Canada’s subscription tax credit is set to expire after
the 2024 tax year. While the labor tax credit has no
expiry date, its future may depend on the party in
power. Conservative party leader Pierre Poilievre, the
main rival to current prime minister Justin Trudeau,
has been an outspoken critic of the package from
the outset. The outcome of this political debate
could have a significant impact on local news in
Canada. The possibility that the labor tax credit could
disappear under a new government has contributed
to uncertainty among publishers who have relied on
these credits to hire.
Still, many of our interview subjects, including Public
Policy Forum CEO Edward Greenspon believe the
program will continue. “I don’t see this government
backing out of this,” Greenspon said.
There are other big questions hanging over the program,
like whether it has actually helped stave off the collapse
of newsrooms. Even with a multi-million dollar tax
windfall, Postmedia said in January it would lay off 11%
of its editorial staff. The QCJO application process has
also been criticized for being too lenient on frequent
purveyors of misinformation, given the program’s
underlying goal of protecting democracy.
Beyond the journalism tax credits, the Canadian
government is also pursuing other sources of funding
for the news industry through its Online News Act,
which is backed by News Media Canada, and modeled
after Australia’s News Media Bargaining Code. The
Online News Act would require large platforms like
Meta and Google to pay qualified news organizations
for content and would allow for collective bargaining.
15
Rescuing Local News Through Tax Credits: A review of North America’s approaches
Canada’s experiment with journalism tax credits offers
important lessons for U.S. lawmakers. Tax solutions
have already been considered by Congress and states
as a mechanism for strengthening local news. Canada’s
experience can help U.S. lawmakers to improve upon
Canada’s model and develop a policy approach that
is even more likely to achieve its objectives, while
minimizing costs.
Even so, the Canadian model is not a perfect
comparison for the U.S. As previously mentioned, the
country has a more established history of government
investment in news. Canadians are also somewhat less
politically polarized than the U.S. and somewhat more
trusting of the media. All of this makes the possibility of
issuing tax credits to news organizations slightly more
politically palatable up north. To be effective in the U.S.,
lawmakers should aim to ensure the benefits of tax
incentives are widespread, sustainable, and free from
government interference in the production of news.
In light of Canada’s experience and taking account of
the differences between the two countries, we offer six
recommendations for U.S. lawmakers to consider as
they develop their own proposals:.
• Structure payroll tax credits with the smallest
newsrooms in mind: Policymakers should ensure
diverse perspectives are represented when drafting
criteria for who should qualify for tax credits. These
criteria should be content-neutral and should
consider models of journalism beyond written
news. This diversity should also be represented in
whatever entity ultimately decides who qualifies
for tax credits. The voices of major publishers are
important, since they are also major employers
in the news industry. But the voices of smaller
newsrooms must be heard as well.
To avoid locking the smallest newsrooms out of
these benefits, qualifying criteria should focus
not on a minimum number of employees, but on
adherence to journalistic norms and commitment to
original reporting. Canada’s Independent Advisory
Board, while under-resourced, offers a model of this
style of vetting.
• Implement subscription tax benefits at the point
of sale: Tax credits for subscriptions require
substantial forward thinking for readers at the
point of sale. Policymakers should consider
approaches that offer more immediate benefit
to consumers. The think tank Democracy Policy
Network has proposed a voucher model, where
local governments offer residents a set amount
of money which they can elect to distribute to
the newsroom of their choice. Another approach
being considered on Capitol Hill would be to offer
tax credits directly to newsrooms for increasing
subscriptions, so publishers could offer a discount
at the point of sale. To increase awareness of the
subsidy, publishers might also consider providing
notice to users about the tax credit on their
subscription pages and in their marketing.
• Impose transparency measures to allow for public
accountability: To enable independent assessments
of the program’s efficacy and fairness, lawmakers
should seek to share as much information publicly
as possible with regard to how much money is
being spent, the size of the entities claiming the
tax credits, and other aggregate data that could
illustrate the program’s impact. Governments
should publish this data in an annual report. They
might also consider appointing independent review
boards — made up of representatives from industry,
nonprofits, and academia — to publish regular
reports on the costs and benefits of the program.
• Experiment with different tiers of credits for employee
retention and growth: One of the challenges facing
lawmakers is how to encourage new investment in
the local media industry. To address this challenge,
lawmakers should consider offering payroll tax
credits that are tiered based on whether publishers
are simply retaining employees or whether they’re
adding new journalists to their teams. Newsrooms
that are adding net new journalists would be eligible
for a payroll tax credit at a much higher percentage
of employees’ salaries.
• Continue to prioritize local news over national: Unlike
in Canada, legislation in the U.S. has been primarily
focused on community news, which is the right
approach due to the deep challenges in that space.
Legislation should restrict the publishers that can
take advantage of the tax benefits to newsrooms
that (1) produce original news and (2) that serve the
needs of the local community. The Local Journalism
Sustainability Act is one example of a proposal that
includes these limitations.
Implications for Policymakers
16
Rescuing Local News Through Tax Credits: A review of North America’s approaches
This approach is likely to weed out not only better
resourced national players, but also “pink slime”
journalism that is often politically motivated and
may not be considered “true” local news. Focusing
on local media may also be more politically feasible.
According to recent polling by Knight Foundation
and Gallup, while just 35% of Americans felt they
could rely on national news, support is much higher
for local news, with 52% of Americans saying they
find local news reliable.
• Test tax credits for local news advertisers: Lawmakers
should experiment with tax credits for businesses
that advertise with local news organizations, as
proposed by the Local Journalism Sustainability
Act. There are several benefits to offering small
businesses a tax credit for advertising in local
media. If the ads themselves are effective in
driving business, advertisers may see an upside
in continuing to advertise with local media, even if
government funding expires or runs out. It is also
likely to be more politically appealing. At the federal
level, lawmakers have framed news tax credits as
key to protecting democracy through a healthy
press. This is a worthy goal, but given widespread
partisan mistrust of the press it is unlikely to be
broadly appealing across party lines. A potentially
stronger framing would be to cast the credits as a
benefit for small business owners and the broader
community.
There are potential costs as well, as detailed above.
This approach may be expensive for taxpayers
relative to its benefits, it could advantage large
companies relative to smaller ones, and it could
even shift ad spending from digital startups to
local incumbents. Policymakers should track the
implementation of this policy to measure how these
costs and benefits play out in practice – which
suggests it might be best if a state or two tried this
policy first before national adoption.
Canada’s model shows that journalism tax credits can
have a meaningful impact on newsrooms, but need to
be constructed thoughtfully. As U.S. lawmakers think
through ways to support local news, they would do
well to consider Canada’s experience and examine the
recommendations in this paper.
17
Rescuing Local News Through Tax Credits: A review of North America’s approaches
