Multiple states are evaluating reforms that would impose a sales tax on marketing and advertising services. The proposals are part of a greater effort for states to generate revenue by removing sales tax exemptions on services. Proponents argue that the changes more accurately reflect the current ratio of spending on goods vs. services; in the 1950s, services accounted for 60% of the U.S. economic output and employment, and today they account for well over 80%.

California’s Senate Bill 8, also known as the Upward Mobility Act, would impose a tax on services, exempting health care and education. The bill, which was first proposed last December and is currently sitting in committee, would be expected to generate $10 billion a year and more than double the state’s revenue. In an editorial earlier this year in the Los Angeles Daily News, California State Senator Bob Hertzberg (who introduced the bill) and others wrote, “To achieve a future as promising as California’s past, we need a tax system that is based on this real economy of the 21st century while ensuring that new revenue is invested in strengthening the ladder of mobility for all our residents.”

Pennsylvania Governor Tom Wolf has called for a budget that would eliminate tax exemptions for dozens of services and products, including advertising services, while raising the sales tax from 6% to 6.6%. However, business-to-business purchases would remain exempt to allow businesses to grow, according to the administration. A test vote on the governor’s budget at the beginning of June was shot down in Pennsylvania’s House of Representatives by 193-0.

A sales tax reform bill in North Carolina has already passed through its House and is currently sitting in a Senate committee. James Melcher, owner of A1 Expert Autocare in Angier, NC, told the Raleigh News & Observer that a sales tax on services would essentially be a double tax for entrepreneurs who pay taxes on their income. “You’re taxing twice on the same amount of money,” Melcher said. “That would really hurt our business. That’d make people back up a long ways.”

Illinois governor Bruce Rauner had made sales tax reform a fundamental part of his 2014 election campaign. In a jobs and growth agenda issued by his campaign last year, it was estimated that a sales tax on services would generate over $600 million annually, including over $100 million from advertising agencies, marketing consulting services, printing and commercial art and graphic design. Currently there are no bills in the state’s legislature on the matter. Bills in California and North Carolina would also include income tax cuts and corporate tax reforms.

In addition, the U.S. Senate Finance Committee released a report exploring federal tax reform that would bar businesses from taking a full deduction on advertising expenses in a single year, and instead prorate 50% of the deductions over a five- or 10-year period. The report said $169 billion could be raised in 10 years with the change. In response, the Association of National Advertisers wrote, “This would be a radical departure from over 100 years of corporate tax policy. It also would seriously undermine the ability of American companies to market their goods and services effectively and efficiently.”