FILE PHOTO: A Google search page is seen through a magnifying glass in this photo illustration taken in Berlin, August 11, 2015. REUTERS/Pawel Kopczynski/File Photo

THE NEUTRAL ZONE

Maryland became the first state Friday to tax big tech companies for revenue from their digital advertising. The tax was vetoed by Maryland Gov. Larry Hogan, but the state’s Democratically-controlled legislature overrode the veto, arguing that large tech companies such as Amazon and Google must pay their fair share to aid their communities as they battle a pandemic-fueled recession. Big tech stocks have skyrocketed during the pandemic, a benefit lawmakers said should be reflected in state coffers. 

The tax could garner up to $250 million in its first year via a 10% tax on companies making more than $15 billion in global revenue, in addition to a smaller tax on less profitable companies. The revenue would fund Maryland schools and its recently-passed education reform. 

Critics of the tax warn that it could harm small and local businesses by making it more expensive for them to advertise on those platforms. The Internet Association, which represents companies like Facebook and Google, said that small businesses rely on digital advertising as “a critical lifeline” to gain new customers, while Gov. Hogan argued that it would be “unconscionable” to raise taxes and fees on Marylanders during a time of financial instability. 

Efforts to tax tech giants come amid an escalating debate about their economic powers and larger roles in society, especially as tech companies collect and sell more user data. Other states are considering similar measures to capture some of the massive revenue in big tech. In Kansas, the governor proposed new taxes for online streaming services such as Netflix and Hulu, while lawmakers in Washington state have sought to tax companies that sell consumers’ personal data as part of a broader push to protect online privacy.

MEDIA PERSPECTIVE

This section includes an aggregation of articles showing different viewpoints on the topic.

Big Tech’s Unlikely Next Battleground: North Dakota – The New York Times – 2/14/2021
North Dakota is part of a new front in the battle over Big Tech and its power. Frustrated with a lack of action from courts, regulators and Congress, tech rivals and critics are turning their attention to state legislatures, pushing bills that seek to tax the biggest tech companies, rein in their power and limit their control over the internet.

Maryland’s Legislature Just Imposed a New Tax on Digital Advertising by Overriding Gov. Larry Hogan’s Veto – Reason – 2/12/2021
Arguments in favor of overturning the veto on Friday included a mishmash of populist condemnations of “big tech” platforms, vague promises to use the money to improve Maryland schools, and non sequitur claims about how taxing digital ads would reduce teens’ use of e-cigarettes and vaping products.

Big Tech’s road to underperformance and why its dominance is waning – CNBC – 2/4/2021
Taxes: According to data from Empirical Research Partners, just prior to the pandemic the median technology and interactive media firm was paying an effective tax rate of about 13%, more than 5% lower than the median for the rest of the market. Therefore, it is logical to believe that tech’s leadership is disproportionately exposed to a shift in corporate tax policy.

Debate heats up over how countries tax Big Tech companies – Associated Press – 1/27/2021
Experts and officials say time is getting short. Manal Corwin, a tax principal at professional services firm KPMG and a former Treasury Department official in the Obama administration, said digital taxes multiplying outside the OECD process “are threatening to trigger a trade war.” U.S. trade officials have called unilateral digital taxes unfair and threatened trade retaliation against French goods, but have held off imposing sanctions.

INFLUENCER PERSPECTIVE

This section includes an aggregation of tweets showing different viewpoints on the topic.

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