Maryland Approves "Digital Advertising Tax" And New York Could Be Next

AdAge reported on the imposition of a digital advertising tax passed by Maryland legislators just a few days ago.  It enacts a 10% tax for "every digital ad sold by companies such as Google and Facebook" while also applying a lesser tax to smaller advertising companies.  It appears that most forms of digital advertising will be covered.  Banner ads, search advertising, and "other comparable services" were specifically mentioned.

On one hand, this seems like a reasonable evolution of tax policy--especially when considering that the revenues are earmarked for public schools and mostly impact mega-wealthy companies.  It also shows a willingness of lawmakers to address a space that to this point, has been basically the wild-west.    On the other, there are sure to be ripples and unintended consequences to such a measure.  For example, who is going to pay this tax?  Of course FB and GOOG might write the check at the end of the day, but they will (almost) surely pass these costs to the consumer.  While such a cost is bearable to large companies with a huge advertising budget, it may present a barrier for small businesses and new market entrants.  Commentators also raised the issue over double-taxation, arguing that advertising is basically already taxed by the sales tax during the exchange of goods or services it facilitates. 

Only time will tell if this is a good idea that spreads across other states, or if its a terrible idea.

Link to full article below:

https://adage.com/article/digital/maryland-approves-digital-advertising-tax-and-new-york-could-be-next/2245881