Broader than Billed: Why California’s new digital tax could raise more than expected

A new research paper from WPI Strategy, commissioned by the Silicon Valley Tax Directors Group, examines whether California’s new sales tax on digital prewritten software and SaaS could raise more revenue than official estimates suggest

The state expects the tax to raise around $2 billion annually, but WPI Strategy’s analysis finds that this may sit towards the lower end of the plausible range. Using three independent approaches - top-down market sizing, company-side revenue analysis and demand-side expenditure modelling - the paper estimates central revenues of $2.8 billion to $3.5 billion, with high scenarios of $5.6 billion to $6.3 billion. The findings suggest the tax base may be broader than assumed, with potential implications not only for technology firms, but also for businesses across professional services, healthcare, manufacturing, retail, education and the public sector.