An article posted February 13, 2021 by Jody Serrano on Gizmodo, announced that Maryland has become the first state to place a tax on digital advertising revenue. The percentage of tax liability would range from 2.5% to 10% and would be based on the company’s annual global revenue.
While the tax would apply to any company that generates revenue from the sale of digital advertising, the most notable companies affected are tech giants Facebook, Google and Amazon.
Opposition to taxing revenue from digital advertising is strong not only from Facebook, Google and Amazon but also from legislators and Marylanders for Tax Fairness. As a result, it appears likely this new law will be challenged in the court system.
Those opposed to the tax law argue that the burden will be promptly handed down to the small businesses that purchase the ads and their customers, thereby not drastically effecting Big Tech companies at the end of the day; but rather saddling Marylanders with added costs, now during the pandemic and well into the future.
While it is unclear whether this new legislation will survive the impending legal challenges, it has opened the door for other states that have been considering similar legislation. Those states include New York, Indiana, Connecticut, and West Virginia.
With the continued rapid growth of digital advertising, the outcome of Maryland’s new law will bear close attention. Whether one relies heavily on digital advertising or not, we strongly suggest reading the full article posted on Gizmodo along with the links embedded within the article. The success or failure of this legislation could have a far reaching impact on future efforts to tax revenue from the sale of digital advertising.