by Eileen S. Povich
Last month, Robert Reeve, a digital tech worker from Washington, D.C., went to visit his mother in Michigan for a week. Soon, ads for a brand of toothpaste used by his mother – which he also used while staying at her house – appeared on his Twitter feed.
Furious, Reeve posted a thread on Twitter explaining how tech companies can determine if your phone is in an unusual location, then mine nearby phones for data and use the information to send you targeted ads.
“We never talked about this brand [of toothpaste] Or you searched for it on Google or something like that.”
Reeve struck a nerve: his modest Twitter account swelled from around 500 followers to 39,000 followers, and his topic garnered more than 116,000 retweets.
The proliferation of unsolicited Internet advertising and Big Tech’s massive profits have prompted bipartisan efforts to tax digital ads or find other ways to monetize tech companies’ mining of personal information.
Many Democrats are offended by the wealth of the high-tech giants and would like to leverage the fortunes of entrepreneurs to help people at the bottom of the economic ladder. Many Republicans are outraged by what they see as anti-conservative bias on social media, including former President Donald Trump’s ban on Twitter and Facebook. Members of both parties object to the Internet companies’ breach of privacy and monetization of personal information.
“As a conservative lawmaker, I normally despise taxes, but with the growth of social media and the bias against some viewpoints, taxes are a way we can usually achieve fairness in the system,” Senator Trent Garner said, in an interview. The Republican introduced a bill that would tax online advertising and use the money to fight cybercrime. “This is 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 a law creating a digital advertising tax, and approved the bill in February due to Republican Governor Larry Hogan’s veto. In the wake of Maryland, nine other states have considered taking similar measures.
The Internet Association, a trade organization made up of internet giants from Amazon to Zillow, has led fierce lobbying efforts against the bill, calling it “discriminatory.”
“This is a case of legislative overreach to penalize 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.
She joined the American Chamber of Commerce and several other groups representing the technology industry in filing a lawsuit in federal court to block the Maryland law.
The Maryland lawsuit did not dissuade other states: At least nine states are considering charging for internet advertising or use of personal data, according to the Tax Foundation, a think-tank that advocates for broader-based taxes, rather than fees for one sector of the economy. . Details of who will pay vary by state.
In response, attorney Stephen Kranz, a partner at McDermott Will & Emery, who is representing the plaintiffs in the Maryland lawsuit, received a warning to other states: “After Maryland lands you in court,” he said in a phone interview with Stateline.
Krans said he is tracking state legislation and keeping a close eye on Connecticut in particular, where some Internet tax bills are gaining momentum. “We are prepared to sue in Connecticut if this becomes necessary,” he said.
Jared Walchuck of the Tax Foundation, vice president of state projects, argued that taxing digital advertising is unfair to businesses because it is “an extra tax layer on an already taxable activity. Despite the expectations of state lawmakers, most of the burdens will be felt within states… by the customers themselves.
Krans speculated that if a tax were assessed on ads that support online streaming services, for example, all streaming services would become subscription-only, making them unaffordable to low-income consumers. Walchuck said some bills could conflict with the federal Internet Tax Freedom Act, which is designed to prevent internet access from being taxed.
Krans said state lawmakers who believe internet companies aren’t paying their fair share of taxes should raise corporate taxes across the board. But these kinds of tax changes don’t spark the public passion like Internet taxes.
Garner of Arkansas said he introduced his bill after hearing from a voter, through a post on the lawmaker’s Facebook page, that urged him to address the issue of social media ads. “Once that person did, I found there was a huge public debate about it,” he said in a phone interview.
“Social media is running unchecked,” he said. “They are not good players in the system.” “Whether by tax or other methods, we have to address the situation.” He said that while the legislature has been postponed for this year, the issue will not go away, and that he plans to bring it up again in 2022.
On the other side of the political spectrum, Connecticut Representative Ann Hughes, a Democrat who co-chaired the Progressive Caucus, co-sponsored a broad bill that would tax Internet companies with at least $10 billion in advertising revenue in Connecticut, on Gross revenue basis, using the Maryland bill as a model.
Progressives are “looking for ways to responsibly increase targeted revenue, especially on the actors who have made huge profits in this pandemic,” Hughes said. She said it was specifically targeting Facebook, Google and Amazon.
That sentiment is shared by Washington State Representative Shelley Klopa, a Democrat who represents the Seattle suburbs where Google’s campus is located. She has no qualms about taking on the tech giant and has held a bill that would impose a 1.8% tax on the sale of consumer data, data often used to create targeted ads like the ones Reeve has seen. She said the bill might have died for this year, but the conversation was just beginning.
The purpose of the legislation, she said, was “to provide some revenue that we can make to the people of Washington State for the benefit of the people of Washington State. This is raw material that is extracted from them and they get nothing for it.”
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 an online purchase. She said she would willingly hand over the personal data so that she could enjoy the convenience of buying online. But it is completely different if this information is presented to others who bombard it with advertisements.
Christopher Gilren, TechNet’s CEO for the Northeast, said at a March hearing of the Connecticut Legislature’s Joint Finance, Revenue and Interconnection Committee that the bills for taxing online advertising were misplaced. TechNet represents chief technology officers from technology companies of all sizes.
He testified that “this kind of punitive tax policy targeting one industry is likely to discourage companies of all kinds from innovating, investing, and being present in the country, as they may be the next target of the state’s wrath.”
“Connecticut businesses depend on digital advertising to keep customers informed of their offerings, hours of operation, and more. Especially after a year that saw up to a third of small businesses in the state shut down due to COVID, the last thing the state should think about is increasing the cost of reaching their customers.” .
He mentioned the Maryland tax in court and strongly suggested that Connecticut should land there as well, if passed. The organization’s email was not answered.
“Of course, they sued [in Maryland]“This is the most powerful lobby on earth,” Hughes said. “They commodify your browsing history, they sell all that data. [for targeted ads] And Connecticut needs to get its fair share of taxes.”
Nobel laureate Paul Romer, a professor at New York University who has studied internet tax, dismissed the idea that taxing ads would hurt low-income people by urging more companies to charge for internet searches or switch to subscription-only forms.
“Can’t people take it? That’s just too normal,” Romer said. “People pay for cars, food, and clothes. In a way, it’s a matter of public policy that we don’t charge people for digital search. It annoys me, the companies’ blatant dishonesty when they go out and push for what they do.”
Romer said the state’s efforts to tax internet advertising are an example of the theory that when there is “something harmful that people do, it’s a good candidate for the tax.” He said the Internet has repeatedly proven itself to be harmful by spreading inflammatory rhetoric across the political spectrum. This, he said, makes it ready for taxation.
“You have people on the right who are worried about Trump’s ban, you have people on the left who are worried about the Russians” [disinformation campaign]. If you take these two sides, there is something they can finally agree on.”
Maryland lawmakers move ahead with first tax on internet advertising إعلانات
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