Internet Ads A Popular Tax Target For Both Parties | Business
Last month, Robert Reeve, a digital tech worker from Washington, DC, went to visit his mother in Michigan for a week. Shortly thereafter, advertisements for a brand of toothpaste his mother uses – and which he also used while staying with her – appeared on his Twitter feed.
Outraged, Reeve posted a Twitter thread explaining how tech companies can determine if your phone is in an unusual location, then pull data on nearby phones and use the information to send you targeted ads.
“We never talked about this brand [of toothpaste] or googled or something like that, ”he posted.
Reeve struck a chord: his modest Twitter account grew from around 500 subscribers to 39,000, and his thread gained more than 116,000 retweets.
The proliferation of unwanted internet ads and the staggering pandemic profits of Big Tech have fueled bipartisan efforts to tax digital ads or find other ways to capture revenue from the mining of personal information by tech companies.
Many Democrats are offended by the stratospheric wealth of the tech titans and would like to exploit the business fortunes of the tycoons to help people at the bottom of the economic ladder. Many Republicans are outraged by what they perceive to be anti-conservative social media bias, including former President Donald Trump’s Twitter and Facebook ban. Members of both sides oppose the invasion of privacy and the monetization of personal information by internet companies.
“As a conservative lawmaker, I generally despise taxes, but with the growth of social media and prejudices against certain views, taxation is a means by which we can generally achieve system fairness,” said Arkansas State Senator Trent Garner in an interview. The Republican introduced a bill that would tax internet advertising and use the money to fight cybercrime. “It’s a direct way for Arkansas to meet the needs of its citizens,” he said.
Maryland, which has a Democratic-led legislature, was the first state to pass legislation creating a digital advertising tax, approving the Republican Gov. Larry Hogan’s veto bill in February. In Maryland’s wake, nine other states have considered similar measures.
The Internet Association, a business organization made up of Internet giants from Amazon to Zillow, has led a fierce lobbying effort against the bill, calling it “discriminatory.”
“This is a case of legislative overrun, punishing an industry that supports more than 100,000 jobs in Maryland and contributes tens of billions of dollars to its economy each year,” the group said in a statement.
He joined the United States Chamber of Commerce and several other groups representing the tech industry to bring a lawsuit in federal court to block Maryland’s law.
The Maryland lawsuit did not deter other states: At least nine are considering levies on internet advertising or the use of personal data, according to the Tax Foundation, a think tank that advocates for broader taxes, rather than levies on a sector of the economy. The details of who would pay vary by state.
In response, Washington, DC, attorney Stephen Kranz, a partner at McDermott Will & Emery who represents plaintiffs in the Maryland lawsuit, has a warning for other states: “Following Maryland takes you to court,” a- he declared in a telephone interview. with Stateline.
Kranz said he is following state law and keeping a particularly close eye on Connecticut, where a few internet tax bills are escalating. “We are ready to litigate in Connecticut if it becomes necessary,” he said.
Jared Walczak of the Tax Foundation, vice president of state projects, argued that taxing digital ads is unfair to businesses because “it’s an extra layer of tax on an activity that is already taxed. Despite the expectations of state legislators, most of the burdens will be felt within states… on the customers themselves.
Kranz speculated that if a tax were imposed on ads that support Internet streaming services, for example, all streaming services would become subscription-only, making them unaffordable for low-income consumers. And Walczak said some of the bills could run counter to the federal Internet Tax Freedom Act, which is designed to prevent Internet access from being taxed.
Kranz said state lawmakers who believe internet companies are not paying their fair share of taxes should increase corporate taxes at all levels. But these kinds of tax changes don’t arouse public passion like taxes on the Internet.
Garner from Arkansas said he introduced his bill after hearing from a voter, in a post on the lawmaker’s Facebook page, who urged him to address the problem with media ads. social. “Once a person did that, I found out that there had been a great basic discussion about it,” he said in a telephone interview.
“Social media has worked without control. They are not good players in the system, ”he said. “Whether it’s through taxation or other methods, we have to fix the situation. While the legislature has adjourned for the year, the problem is not going away, he said, and he plans to raise it again in 2022.
Across the political spectrum, Connecticut State Representative Anne Hughes, a Democrat who co-chairs the Progressive Caucus, has co-sponsored a sweeping bill that would tax internet companies at least $ 10 billion in advertising revenue. in Connecticut, on a gross income basis, using the Maryland bill as a model.
Hughes said progressives “were looking for ways to responsibly increase targeted revenues, especially on those players who have benefited tremendously from this pandemic.” It specifically targets Facebook, Google and Amazon, she said.
This sentiment is shared by Washington State Representative Shelley Kloba, a Democrat who represents the Seattle suburb where a Google campus is located. She has no qualms about taking on the tech giant and has passed a bill that would impose a 1.8% tax on the sale of consumer data, data often used to generate targeted ads like the one Reeve has. view. Bill is probably dead for the year, she said, but the conversation is only just beginning.
She said the purpose of the legislation is “to provide income that we can generate for the people of Washington State for the benefit of the people of Washington State.” It is a raw material that is extracted from them for which they get nothing. “
She said it’s one thing if she gives her local bathroom and kitchen store her credit card information, address, and email so she can make a purchase online. She allegedly voluntarily handed over personal data so that she could enjoy the convenience of shopping online, she said. But it is quite another if this information is then given to others who bombard it with advertisements.
At a March hearing of the Connecticut Legislature’s Joint Finance, Revenue, and Surety Committee, Christopher Gilrein, TechNet’s executive director for the Northeast, said bills to tax ads on the Internet were misplaced. TechNet represents CEOs of technology companies of all sizes.
“This type of punitive single-industry tax policy would likely discourage companies of all kinds from innovating, investing, and gaining a foothold in the state, fearing that they would be the next target of state wrath.” , did he declare.
“Connecticut businesses depend on digital advertising to keep customers informed of their offers, schedules and more. Particularly after a year that has seen up to a third of the state’s small businesses shut down due to COVID, the last thing the state should consider is increasing the cost of reaching its customers. “
He mentioned that the Maryland tax is in court and strongly suggested Connecticut would land there as well, if passed. An email to the organization went unanswered.
“Of course they continued [in Maryland]”Hugues said.” This is just the most powerful lobby on Earth. They are commodifying browsing history, they are selling all this data. [for targeted ads] and Connecticut should receive its fair share of taxes.
Nobel laureate Paul Romer, a professor at New York University who studied internet taxation, dismissed the idea that taxing ads would disadvantage low-income people by causing more companies to charge for research on the Internet or switch to subscription-only models.
“Can’t people afford it?” It’s such an absolute bs, ”Romer said. “People pay for cars, food, clothes. Either way, it’s a matter of public policy that we don’t charge people for digital research. It offends me, the blatant dishonesty of companies when they go out and push for what they are doing.
Romer said the state’s efforts to tax internet advertising are an example of the theory that when there is “something harmful people do, they are a good candidate for a tax.” The internet has repeatedly shown itself to be harmful, he said, by proliferating inflammatory rhetoric across the political spectrum. This makes it ripe for taxation, he said.
“You have people on the right worried about the ban on Trump, you have people on the left worried about the Russians [disinformation campaign]. You take these two sides, there’s something they can finally agree on.
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