On Friday (Feb. 12), Maryland became the first U.S. state to pass a bill to raise taxes on advertising revenue from big tech companies. Governor Larry Hogan had previously vetoed the bill, but the Democratic-controlled legislature eventually overrode the veto.
After the state House voted 88 to 32 to override the governor’s veto, the state Senate did the same by a vote of 29 to 17.
The bill has two components: raising taxes on tobacco products and imposing a new, higher tax on digital advertising revenue.
A summary from the state House said, “The bill imposes a tax on the annual gross receipts of individuals who engage in digital advertising services in the state.”
The summary reveals that people would be taxed based on their total worldwide income for the entire year; those with higher digital advertising income would be required to pay income tax at a higher rate.
State Senate President Bill Ferguson (D) is spearheading the legislation. In a speech on social media shortly before the vote, he said, “Profits for companies like Amazon, Facebook and Google have grown dramatically during the Epidemic, while our businesses on Main Street have struggled to keep up.”
He said, “This tax on companies that benefit from more than $100 million a year in digital advertising revenue alone is an important mechanism to ensure that Maryland’s large tech companies can pay taxes just like our small businesses. At a Time when Maryland’s budget is being impacted on an unforeseen and astronomical scale by COVID-19 (the Communist virus), Maryland families and businesses are footing the bill, or large tech companies can begin to foot their, fair share.”
One analysis suggests that the new tax on advertising revenue could collect about $250 million a year.
The bill is one of a series of efforts across the U.S. to curb large tech companies (big tech companies like facebook). Big tech companies are accumulating more money and publicly demonstrating the power they hold by blocking accounts of people like former President Trump (Trump).
Last year, Republican Gov. Hogan said in a letter to state Senate President Ferguson and state House Speaker Adrienne Jones that he vetoed the bill. He argued that the bill “would raise taxes on Marylanders at a time when many people are already out of work and in financial distress.”
Maryland Attorney General Brian Frosh, a Democrat, reviewed the bill and said it was consistent with the Constitution.
He told Gov. Hogan in an April 2020 letter that some provisions may raise concerns if the legislation is challenged in court, but “we do not believe that they are clearly unconstitutional.”
He added, “If those provisions are challenged and a court rules that any of them are unconstitutional, we believe that they can be severed from the bill.”
Several groups opposed the bill’s passage, including the Association of National Advertisers, the Internet Association, and the Marylanders for Tax Fairness The coalition hired Doug Mayer, a former Hogan aide, as its spokesman.
The group called the legislation “hopelessly vague” and claimed that the bill would certainly raise taxes on small businesses as well.
In a statement Friday (Feb. 13), Mayer said, “Historically, tax increases have been short-sighted, foolish and harmful to countless small businesses and employees, and Marylanders will remember that.” .
The Tax Foundation, a tax policy nonprofit, said the bill could conflict with the Permanent Internet Tax Freedom Act. The act is a federal law that prohibits discriminatory taxation of e-commerce. The foundation said the bill does not specify exactly what kind or species (of businesses) might be taxed.”
The Internet Foundation, a coalition that represents companies targeted by lawmakers for tax increases, said the bill would be a “tax law. The coalition says the law will be challenged in court. Robert Callahan, the coalition’s senior vice president for state government affairs, said, “At least Maryland businesses and consumers can rest easy knowing that the courts will have the final say on this issue and that it’s the law, not politics, that will determine the ultimate outcome.”
Recent Comments