Maryland approves the first state tax on digital ads from Facebook, Google
Maryland has approved the country's first tax on the revenue brought in from digital advertisements placed by companies like Facebook, Google, and Amazon.
Credit: Maryland State House
On Friday, the State Senate voted to override the governor's veto of the measure following a similar vote from the House of Delegates, The New York Times reports. The measure is expected to generate as much as $250 million in its first year.
There do appear to be legal risks to the measure, which will likely face stiff challenges in court over how much governments can tax social media and technology giants. Both opponents and analysts cautioned that the bill could run afoul of both the First Amendment and federal regulations preventing discriminatory taxes on internet companies, The Washington Post reported in January.
The Maryland tax specifically applies to digital ads that are displayed within the state. It's also levied based on the ad sales that a company generates. Companies that make at least $100 million to $1 billion a year will be taxed at a 2.5% rate. Companies that make more than $15 billion -- which includes Facebook and google -- will face a 10% tax on digital ad revenue.
In addition to Silicon Valley lobbyists, other opponents of the bill include Maryland Republicans, local media outlets, and telecom companies. Those opponents say that the cost of the bill could be passed along to small businesses that buy advertising.
But state governments, which have been hurting during the pandemic, see similar bills as a way to refill the coffers. Legislators in Connecticut and Indiana have already introduced similar measures to tax social media giants.
The tax legislation is just part of a growing debate about the dominance and power of technology giants. In the U.S., companies like Facebook and Google are facing multiple antitrust lawsuits. Antitrust legislation introduced at the federal level could target those companies, as well as Apple.
The measures in the U.S. also follow in the footsteps of governments in Europe, which have introduced both new restrictions and new taxes on American and other technology giants.
Although antitrust laws and regulations could spillover and affect Apple, the Cupertino tech giant doesn't rely on advertising revenue. Instead, the bulk of the money it makes comes from sales of hardware and services.
Credit: Maryland State House
On Friday, the State Senate voted to override the governor's veto of the measure following a similar vote from the House of Delegates, The New York Times reports. The measure is expected to generate as much as $250 million in its first year.
There do appear to be legal risks to the measure, which will likely face stiff challenges in court over how much governments can tax social media and technology giants. Both opponents and analysts cautioned that the bill could run afoul of both the First Amendment and federal regulations preventing discriminatory taxes on internet companies, The Washington Post reported in January.
The Maryland tax specifically applies to digital ads that are displayed within the state. It's also levied based on the ad sales that a company generates. Companies that make at least $100 million to $1 billion a year will be taxed at a 2.5% rate. Companies that make more than $15 billion -- which includes Facebook and google -- will face a 10% tax on digital ad revenue.
In addition to Silicon Valley lobbyists, other opponents of the bill include Maryland Republicans, local media outlets, and telecom companies. Those opponents say that the cost of the bill could be passed along to small businesses that buy advertising.
But state governments, which have been hurting during the pandemic, see similar bills as a way to refill the coffers. Legislators in Connecticut and Indiana have already introduced similar measures to tax social media giants.
The tax legislation is just part of a growing debate about the dominance and power of technology giants. In the U.S., companies like Facebook and Google are facing multiple antitrust lawsuits. Antitrust legislation introduced at the federal level could target those companies, as well as Apple.
The measures in the U.S. also follow in the footsteps of governments in Europe, which have introduced both new restrictions and new taxes on American and other technology giants.
Although antitrust laws and regulations could spillover and affect Apple, the Cupertino tech giant doesn't rely on advertising revenue. Instead, the bulk of the money it makes comes from sales of hardware and services.
Comments
HOPE IT GOES DOWN IN FLAMES
A few years back in most states you could purchase a product over state lines on the internet and no one paid state sales tax, unless the company was incorporated. Now in most states that's no longer true. Why should ads be any different? If I buy an ad in a newspaper I pay tax and the company pays tax on those profits. why should the internet be the exception?
Sales Tax
https://www.facebook.com/business/help/225860631518504?id=540542143143969
Why shouldn't the buyer and seller pay sales tax, when brick-in-mortar small business have to when they sell a real book or visit a movie theater?
Also, when a system of abuse goes on long enough, opposition to it becomes increasingly popular.
The people will either *eventually* have their say via elections, or be oppressed by the profiting minority that are holding on to power (which isn’t limited to one party; the Democratic Party is just as corporatist as the Republican Party).
Do you believe in democracy or plutocratic oligarchy?
If you think laissez-faire capitalism is great, you’re either personally benefitting from the abuses and are blinded by various biases (especially survivorship bias, which is popular with “American Dream” capitalists)...
... Or you’re just not paying attention to the very real, documented, and deep-term consequences (such as sociopaths ruling us via the revolving door between corporations and government, legal and financial systems that benefit only the wealthy, ecological disaster, abuses of humans & animals in industry, various societal harms, etc).
Well, there’s also one more option: maybe you just don’t give a damn.
Google, FaceBook, et al, gather all sorts of news and interesting information at no cost at all. They repackage it and republish it on their various attractive web sites at no cost at all to a large number of readers. Interspersed in all this news and other interesting information are ads for various goods and services who, in turn, pay Google, FaceBook, et al. From the visitors to these sites, Google, FaceBook, et al, gather information about the readers at no cost at all. Google, FaceBook, et al, then use that information to help the ad providers make more targeted ads, thus encouraging even more ads, and making more income for Google, FaceBook, et al.
This is all legal...and so is taxing Google, FaceBook, et al.
So what? What math?