Maryland bill would tax digital ads to pay for education

As the annual session of the Maryland General Assembly got underway last week in Annapolis, state senators introduced a bill that would tax revenue from digital advertising to pay for education.

SB2 was introduced by State Senate President Bill Ferguson (D-Baltimore) and Senate President Emeritus Thomas V. Mike Miller (D-Calvert). Ferguson, who has a history of proposing tech policy legislation, took over as senate president this term after being named Miller’s successor in the fall. Miller, who is an iconic figure in Annapolis and served as senate president for more than 30 years, remains a state senator.

The bill would require companies that make more than $100 million annually on digital advertising overall — Facebook and Google, for example — to pay taxes on revenue derived from ads that appear on the device of a user with an IP address in Maryland, or is “known or reasonably suspected to be using the device in the state,” per the text.

The tax rate ranges from 2.5% to 10%, with the latter bracket including companies that make $15 billion a year or more. Companies that make more than $1 million from digital ads in Maryland would have to file a return with the state.

The digital advertising services that can be taxed include banner ads, search engine ads and the ads that appear in the middle of a site, the text states.

The Washington Post reports that the bill presents a new approach nationwide to taxing digital advertising. It comes as state legislators are seeking funding for education reforms that were proposed by the state’s so-called Kirwan Commission. In the bigger picture, it arrives amid talk of regulating big tech companies and access to personal data.

The bill was assigned to the Budget and Taxation Committee. A hearing has yet to be scheduled.