Maryland became the first state in the country on Friday to impose a tax on digital advertising, as the state’s senate voted to override a gubernatorial veto of legislation that would impose up to a 10% levy on revenue from online ads shown in Maryland.
The enactment of the bill, by a 29-17 vote, marks the beginning of what could become a wave of similar legislation across the country, as policymakers increasingly target the economic dominance of large tech platforms, some of which have built massive financial engines through advertising technology.
It’s also another example of how proposals being introduced abroad to rein in Big Tech are increasingly gaining traction in the United States.
But it could spark a court battle over the legality of the tax and its impact on digital businesses.
The digital advertising provisions of Maryland’s new tax law could raise an estimated $250 million in its first year, with revenues being earmarked for education.
One of the policy’s chief proponents, Senate President Bill Ferguson (D), is a former teacher for Teach for America.
In a Facebook post Friday morning, Ferguson said the bill is targeted at companies that make more than $100 million a year selling digital advertising, a threshold that large technology companies like Facebook and Google would easily surpass.
Facebook and Google generated $84 billion and $147 billion in digital advertising revenue last year, respectively.
“This targeted tax on companies that make over $100,000,000 a year ONLY from digital advertising is a vital mechanism to make sure big tech pays taxes in Maryland, just like our small businesses,” Ferguson wrote.
“At a time when Maryland’s budget is being impacted in unforeseen and astronomical ways due to Covid-19, Maryland families and businesses can foot the bill, or big tech can start paying their fair share.”
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