Maryland has become the first state in the nation to enact a tax on online advertisements.
They had to override a veto though, because Governor Larry “Rat-F%$#” Hogan vetoed the bill, because he promised no new taxes ever.
Revenue is to be dedicated to education:
Maryland today became the first state in the nation to impose a tax on digital advertising revenue, overriding an earlier veto from the governor and incurring the wrath of piles of Big Tech businesses that are all but guaranteed to sue.
The bill (PDF) levies a state tax of up to 10 percent on the annual gross revenues of all digital advertising aimed at users inside Maryland state. Proceeds from the new tax are explicitly earmarked to go into an education fund dedicated to improving Maryland public schools.
“Right now, they don’t contribute,” the bill’s primary sponsor, Sen. Bill Ferguson (D) said of the bill. “These platforms that have grown fast, and so enormously, should also have to contribute to the civic infrastructure that helped them become so successful.”
Both chambers in the state’s General Assembly, its Senate and its House of Delegates, approved the bill by wide majorities last year. Maryland Gov. Larry Hogan vetoed the bill in May, but it had sufficiently high support in both chambers of the legislature to pass a veto override, and both houses approved the veto override this week.
It will work on a sliding scale, with larger companies, like Google and Facebook, paying up to 10% of gross revenue from the portion of their ads from Maryland, which constitutes about 1.8% of the US population.
A coalition of small and medium businesses and trade groups launched a coalition last year to lobby against the tax. The group, which bills itself as Marylanders for Tax Fairness, argues that the tax will “place an unnecessary and undue burden on the state’s entrepreneurs and job creators.”
Yadda, yadda, yadda,
The internet economy wants not to pay taxes.
Among the coalition members are not only several Maryland-based businesses and organizations, including several local Chambers of Commerce, but also most of the large tech-related trade groups. All of the usual suspects who represent advertising, Internet, tech, telecom, or media firms are on the list, including the Internet Association, the IAB, the NCTA, and TechNet. Those four groups represent every online firm from Amazon to Zillow and just about any brand you can name in between.
The stakes for all the firms involved may go well beyond Maryland. Other states, including high-population New York, are considering similar advertising revenue bills of their own.
I’m not sure what the right rate is, though I do support an aggressively progressive tax.