I admit it. We don’t’ really operate in South Dakota. (I even hated dealing with that state when I was the CFO of a wine distribution company.) Or New Mexico or West Virginia (although we do have clients in those states.)
And, over the years, we’ve produced a slew of advertising campaigns for our clients. After all, we knew the products (and services) we developed- and with our talented industrial designers, a creative ad was absolutely in our bailiwick.
And, we never had to worry about sales taxes. After all, this was a service. (And, again, we don’t really worry about NM, WV, or SD.)
But, things are changing fast.
The state of Maryland is going to start charging sales tax on advertising. Specifically digital ads (which we don’t do)- but it’s not much of a stretch to worry about all our advertising services.
Yes. Maryland will be the first state to target online ads. Why? How about $ 250 million a year to add to their coffers? Which means maybe Maryland may finally fund its schools properly. (They will still need $ 750 million more, though.) Maryland is considering a 10% excise tax on advertising revenue. Claiming it’s a way to cover the fact the advertisers are collecting user demographics and browsing history.
And, at least for now, they are exempting folks like us who don’t rake in $100 million in global ad revenue. (I admit it- we don’t rake in $ 100 million for all our revenue! Maybe next year?) As you can see, this advertising tax is clearly targeting Google, Facebook, and Amazon. And the digital ad revenue exceeds $ 100 billion a year in the US alone!
Many newspapers are worried. After all, they use digital advertising and rely on that ad revenue to support their news gathering activities. (So Bezos’ other firm- the Washington Post- may also be a target of this new bill.)
Of course, there is a little thing called the First Amendment standing in the way against this idea. (There also are laws on the federal books that prohibit unfairly taxing internet companies. Think of TheDonald’s response to France taxing our big internet firms.)
Something else to monitor…
What will governments think of next. Something tells me that this may not last long-these huge companies have the resources to fight this.
Alana recently posted..The Safety Net Revisited
we grew up “knowing’ that services weren’t taxed. That truism is losing all across the US, Alana.