House Dems Propose $1 Billion in Subsidies for Local Newspapers

Lawmakers hope tax credits will revive industry as trust in media plummets

media newspapers
New York City newspapers / Getty Images
September 14, 2021

House Democrats are offering more than $1 billion in subsidies to local newspapers as part of a massive spending proposal released this week, even as polls show record levels of distrust in the media.

The $3.5 trillion spending plan includes up to $25,000 in payroll tax credits for each journalist on a local newspaper's payroll. The carve-out will cost $1.3 billion over the next decade, according to the Joint Committee on Taxation. To offset this and other tax credits included in the bill, Democrats are proposing $2.9 trillion in tax hikes through higher corporate, capital gains, and personal income tax rates.

Democrats hope the proposal will rescue local newspapers, which saw employment fall by 57 percent from 2008 to 2020. More than 1,800 newspapers have shut down since 2004 amid a shift away from print advertising and the rise of online media. Confidence in the media has also waned. Just 21 percent of Americans said they had "great confidence" in newspapers, according to a recent Gallup survey. Only television news, big business, and Congress had lower confidence ratings.

The Democrats' plan is vague on which news outlets would qualify for the tax credits. It defines a local news outlet as one that publishes original content that "primarily serves the needs of a regional or local community." The subsidies apply to news outlets that employ fewer than 750 people.

Americans for Tax Reform listed the tax credit as one of 10 "giveaways" that Democrats are offering to liberal interest groups in the spending plan. The group, which supports low taxes, noted that journalists tend to be liberal. The spending bill also proposes subsidies for the solar industry to "promote environmental justice" and a tax deduction of up to $250 for dues paid to labor unions.

The proposal is nearly identical to the Local Journalism Sustainability Act, a bill introduced earlier this year by Sens. Maria Cantwell (D., Wash.), Ron Wyden (D., Ore.), and Mark Kelly (D., Ariz.). In addition to payroll tax credits, the senators proposed a $250 tax deduction for subscriptions to local newspapers.

The AFL-CIO, the country's largest labor union, endorsed the newsroom subsidies in a letter to Democratic leaders earlier this month. The union said that stipends were needed to grapple with a so-called information crisis.

"The loss of the essential local news sources mean fewer Americans have access to fact-based reporting on their local government, communities and the health crisis still plaguing our nation," the union said in a letter to Senate Majority Leader Chuck Schumer (D., N.Y.), House Speaker Nancy Pelosi (D., Calif.), and Rep. Richard Neal (D., Ill.), the chairman of the House Ways and Means Committee.

One Republican on the Ways and Means Committee criticized the subsidy as a handout from Democrats to the media.

"As the Democrats raise taxes and stoke inflation on working families, they're carving out a special tax gift for their friends in the media, which is the propaganda wing of the Democratic Party," Rep. Devin Nunes (R., Calif.) told the Washington Free Beacon. "Bureaucrats will obviously exploit this clause to ensure that Democrat-friendly outlets receive this present while conservative outlets are excluded. Anyone who believes this program will be administered in a politically neutral way should have his head examined."