Silicon Valley-backed Groups Sue Maryland To Kill Country's First-Ever Online Advertising Tax (washingtonpost.com) 109
Top lobbying groups backed by Amazon, Facebook, Google and other technology giants sued Maryland on Thursday, seeking to scuttle a new state tax on their massive online-advertising revenue -- and stop other local governments from following its lead. From a report: The legal challenge contends that Maryland's first-in-the-nation tax is unfair, unconstitutional and incompatible with federal laws that prohibit state policymakers from instituting levies specifically targeting online services. The lawsuit is backed by a broad coalition of businesses nationwide through a series of trade groups, including the U.S. Chamber of Commerce and the Internet Association, a Washington-based organization that counts Silicon Valley's most prominent companies among its members. It carries great legal and political significance at a time when lawmakers well beyond Maryland's borders are starting to eye the tech industry's eye-popping pandemic profits as a potential source of much-needed new revenue.
"In light of the current pandemic and economic uncertainty, increasing taxes on services used by small businesses to keep themselves running is a particularly poor and ill-timed policy," Caroline Harris, the vice president for tax policy at the U.S. Chamber, said in a statement. In the complaint, which was filed in U.S. District Court in Maryland, the tech giants and their political allies argue that the state's online advertising tax suffers from "many infirmities" and, as a result, threatens to "raise costs for consumers and make it more difficult for businesses to connect with potential customers."
"In light of the current pandemic and economic uncertainty, increasing taxes on services used by small businesses to keep themselves running is a particularly poor and ill-timed policy," Caroline Harris, the vice president for tax policy at the U.S. Chamber, said in a statement. In the complaint, which was filed in U.S. District Court in Maryland, the tech giants and their political allies argue that the state's online advertising tax suffers from "many infirmities" and, as a result, threatens to "raise costs for consumers and make it more difficult for businesses to connect with potential customers."
Facebook and Google treat users as product (Score:5, Insightful)
For years these companies have treated their users as products, it only makes sense to me that they should pay taxes on the "sale" of these products as other companies do on the sale of their products.
Re:Facebook and Google treat users as product (Score:4, Insightful)
Users?
We're advertisers' users the same way Gitmo inmates are the US military's users: they use the facilities alright but they'd really rather not.
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Speak for yourself, I like advertising. It has helped me know about products and deals that are cool. Then again I must be a lot more responsible human than you because I don't just buy junk that is presented to me.
Re:Facebook and Google treat users as product (Score:5, Interesting)
I got nothing against advertising. I do object to being tracked, folded, spindled, and mutilated, so that they can show me "relevant" ads. Just show me random f***ing ads, instead of trying to follow me all over the f***ing web.
Re:Facebook and Google treat users as product (Score:5, Interesting)
Just show me random f***ing ads
I remember this version of the internet. What was your favourite? Russian brides? Penis enlargement pills? Spanking the monkey? Sexy singles? Personally as obnoxious as that monkey was it was at least the cleanest adverts we saw.
Conversely every advert I see right now is for some hifi speakers because... Psst... I have a secret. You ready for it. Between us... I bought some speakers. I know, I know it's a major controversy and we strictly need to keep the fact that I typed speakers into a Google search between you and me because the privacy implications of this are HUGE. But it's true. As nice as those speakers look I do miss my sexy singles adverts adding a bit of excitement to my day.
Jokes aside the one thing that has become painfully clear is that these advertisement companies tracking us ultimately have no fucking clue and seemingly only advertise things I am no longer interested in. This may even be positive since I'm even less inclined to buy it.
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I remember that even back in the day reputable sites had ads from reputable sources that were not selling adult services or scams.
And even then they got adblocked via DNS.
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What's a reputable site? I was using the adult content facetiously. The internet of old, even on a "reputable" site was full of adverts for bullshit, scamming, casinos and gambling. Spanking that monkey was an activity you could do on a reputable site. That's between being bombarded with software memory doublers and adverts for other bullshit that doesn't work.
About the only things sites used to advertise that wasn't bullshit was their own products, and largely that still happens.
Frankly I don't miss it. Gi
RAM Doubler was not BS (Score:2)
What's a reputable site?
Presumably a website owned by a corporation or LLC over 24 months old.
That's between being bombarded with software memory doublers and adverts for other bullshit that doesn't work.
Since when was Connectix RAM Doubler "bullshit that doesn't work"? The concept of swapping to a compressed RAM disk worked so well on my Mac back in the day that Linux copied the principle as zram 20 years later (presumably once the patent had expired).
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I get the animosity towards advertisement, and I generally just skip over it, or as in the case of on the DVR I fast forward past it. However, I do have an anecdotal example of the good kind of advertisement. I mentioned to my wife that I would really like to find a St. Louis Style pizza place here in Florida, and three seconds later on Facebook on my phone is an advertisement for the exact kind of restaurant I was looking for. I would never have thought to search for St. Louis Style pizza restaurants he
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If you were responsible, you'd block advertising in order to avoid malware.
Major ad networks have been used to spread malware through advertising.
I like advertising too (Score:1)
The good thing about advertising is that I never have to see it. As someone who uses ublock, YouTube Vanced, and blocking through my router. Online ads for me is so 2006. But if the government gets paid for advertising then it'll be in their best interest to have me remove my ad blockers, and will probably make it illegal.
We all know the only people who get to see ads are Apple users and nobody likes them anyway.
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Users?
We're advertisers' users the same way Gitmo inmates are the US military's users: they use the facilities alright but they'd really rather not.
Users, cattle, etc. What we're not is customers. Google knows that, and that's why we're not treated as customers.
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it only makes sense to me that they should pay taxes
What makes you think *they* are the ones paying tax? Do you think when an entire industry gets a price hike they just say "oh well we had a good run I think we'll just have to eat our profits a bit".
Expect the tax to reflect a proportionate increase in revenue for the companies involved.
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it only makes sense to me that they should pay taxes
What makes you think *they* are the ones paying tax? Do you think when an entire industry gets a price hike they just say "oh well we had a good run I think we'll just have to eat our profits a bit".
Expect the tax to reflect a proportionate increase in revenue for the companies involved.
And since their revenue is almost exclusively from advertisements, expect the advertisers to pay more for the same (negligible) effect. The users' are already at "free", because they're the product.
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The price of things you buy will go up.
No, the price of things sold by that particular advertiser will go up. That does not necessarily mean that the price of things I buy will go up.
It can happen, but the more expensive we make online-advertising, the closer we get the advertising-purchaser to realise that they are mostly wasting their money.
I'm all for a scorched-earth approach regarding online-advertising: If 9/10 sites don't have the ability to stay up without auctioning off their users to advertisers, I'm good with that.
How else to fund Slashdot? (Score:2)
I'm all for a scorched-earth approach regarding online-advertising: If 9/10 sites don't have the ability to stay up without auctioning off their users to advertisers, I'm good with that.
And if one of those 9/10 sites is Slashdot, what site would replace it in your rounds?
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I'm all for a scorched-earth approach regarding online-advertising: If 9/10 sites don't have the ability to stay up without auctioning off their users to advertisers, I'm good with that.
And if one of those 9/10 sites is Slashdot, what site would replace it in your rounds?
/. uses so little resources it can effectively be run on a $10/m DO droplet. If the denizens of slashdot cannot pool together $10/m, maybe it shouldn't be around.
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Anything that hurts advertising (Score:5, Insightful)
gets my vote.
Re:Anything that hurts advertising (Score:5, Insightful)
They may do that. Or, just as likely, spend 10% less on advertising. Or trim the fat from somewhere else in the company. Something that helps them to stay competitive, which is not raising prices.
It's clear that (and I hate this term) what Big Tech is scared of here is companies spending less money on ads.
Re:Anything that hurts advertising (Score:5, Interesting)
Most of this advertising is priced by auction: advertisers pay what they are willing to pay. "What they are willing to pay" is unlikely to change as a result of this, thus the tax will be paid entirely by Google and the ad networks. They can't pass it on to their customer (the advertisers).
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I'm fairly confident that a means can be found to pass it along. Could be by setting a minimum to the auction which covers the tax; that is, the first ad costs substantially more than the additional ones, and you can't buy too many in a single go.
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Could be by setting a minimum to the auction which covers the tax
The tax is a percentage of revenue, so there is no minimum amount needed to cover it.
If Google sets a minimum price, they will be left with unsold ad space.
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That's good to know. In light of this information, my assessment can be updated: The advertisers' ("small business") expenditures will remain unchanged, but Big Tech will give a 10% cut of that portion of their revenue to the state.
Given that these groups are amassing wealth greater than any individual, dictator, state, party, empire, or god-king in the entirety of human history - without proportional benefits to the workers/subjects - my value judgement on the appropriateness of this tax remains unchanged.
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It's clear that (and I hate this term) what Big Tech is scared of here is companies spending less money on ads.
Close. What they're scared of is companies realising that the online advertising that they buy is close to worthless. When the ad industry finally implodes as companies wise-up, a lot of the influence and power that Goole, FB, et al have will be gone.
Re:Anything that hurts advertising (Score:5, Insightful)
This will simply drive up the price of goods and services for everyone as companies must recoup the additional costs of advertising through increased prices.
Bullcrap.
Advertising is a mostly negative-sum prisoner's dilemma. Colgate advertises because Crest advertises, but the market for toothpaste is fixed, so both end up with lower profits and both would be better off if they mutually agreed to reduce advertising.
If advertising is more expensive, businesses will look for other ways to promote their products. This can include lower prices and/or better quality goods and services. These are a net benefit for consumers. Advertising is not.
Look, governments need money to run so they have to tax something. When they tax something, they discourage that thing. So it makes sense to tax things that have negative externalities, such as tobacco, alcohol, and fossil fuels. Most people would including advertising in that list. It is annoying, often misleading, and provides little benefit to the public.
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Advertising is a mostly negative-sum prisoner's dilemma. Colgate advertises because Crest advertises, but the market for toothpaste is fixed, so both end up with lower profits and both would be better off if they mutually agreed to reduce advertising.
Mostly.
For established brands, this is true. There is nothing in the constant Coca Cola adverts that anyone didn't already know.
Sometimes, ads still have information content, such as when a company launches a new product. Ok, you have a new car model, thanks for the info.
Sometimes, ads inform about a business you didn't know about. This is mostly the ads for small shops that opened around the corner, etc. - I just found that my village actually does have a flower shop because they put two billboards along t
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If advertising is more expensive, businesses will look for other ways to promote their products.
You mean advertise somewhere else? You're missing that the entire supply side of the industry just got an equal price rise applied to it. This isn't about one company suddenly becoming a bit less competitive. A blanket tax like this is always passed onto the consumer (or downstream business).
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Businesses don't operate to cover costs. Their goal is to maximize profit. If they could make more profit at a higher price point, they would already be doing it.
The price can't be passed on easily because some companies advertise much more than others, and some not at all.
When I go to Walmart, I can buy Clorox Bleach or Great Value Bleach. The two products are completely identical except for the label and even appear to be made in the same factory. Yet Clorox is 50% more expensive because it is advert
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Not really the right thing to do. In an era when wastefull consumption is destroying our environment, taxing advertising is not enough. In what insane government is taxing the problem rather then tackling the problem sane. Make advertisers legally liable for the qualities of the products they promote. They advertise lies, then they should pay, they made money doing it, they should pay for the harm caused by those lies, not to exclude those that produced and sold the product, NO. Penalise the crap out of the
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PS Forget, quality corporations, producing quality products, WIN. They no longer have to compete against saturation lies sold by the mega corporations, they win many more sales and with LESS money spent on advertising. They no longer will have to compete against lies, reducing the quality of their product, they will be able to take pride in their product and so will their staff they can again afford to value. Big win for the better corporations, really big win and the crap corporations surviving on advertis
This warms my heart. (Score:5, Funny)
Based on the summary, the tech giants are only resisting this tax because of the harm it will cause to many small businesses. This shows that their hearts really are in the right place, since small businesses are the backbone of the American economy, but also unable to group together and defend themselves against oppressive taxes like this.
I am sure that such aggressive taxes would destroy most of these small businesses, and the tech giants would have to swoop in and pick up the slack for the service deficit that would create. So, despite this obvious competitive advantage that the tax would give to the tech giants, they are altruistically standing as noble shields over the little guys who need them.
Two thumbs up, Google, Facebook, and Amazon! It is nice to see that you aren't just motivated by a disgusting sense of entitlement and insatiable greed.
Re: This warms my heart. (Score:2)
Best satire I have read on /. in awhile. Bravo.
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You guys are KILLING me!
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Umm this iwll increase advertising and the government will favor the companies that bring it revenue. It will make it even harder for someone competing with existing businesses to get their word out.
If taxes prevent something how come income taxes haven't reduced employment?
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this iwll increase advertising
By what twisted logic do you reach that conclusion?
If taxes prevent something how come income taxes haven't reduced employment?
Income taxes reduce employment. What makes you think they don't?
Bleh ... (Score:4, Insightful)
"In light of the current pandemic and economic uncertainty, increasing taxes on services used by small businesses to keep themselves running is a particularly poor and ill-timed policy,"
In light of the current pandemic and economic uncertainty, taking a chunk out of our hitherto un-taxed profits is unfair. You can tax the hell out of small businesses for all we care, just don't touch OUR sweet, sweet profits.
1% on everything above the first trillion (Score:2)
Is that much much?
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It wouldn't get you much revenue.
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It wouldn't get you much revenue.
It would also be easy to avoid. Just split into subsidiaries so that each is under the threshold.
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Is there even a company that makes $1trillion in revenue total?
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Maybe not yet. We'll have to wait for Wall Street's present day hyperinflation to trickle down.
This is sabotaging the dollar and all other real currencies, so that the only thing of value will be your precious joules
Controlling interest (Score:2)
Just split into subsidiaries so that each is under the threshold.
And watch lawmakers apply the threshold to an entity and all companies in which the entity has a controlling interest.
If the users are the Product, they should be taxed (Score:5, Insightful)
They sell a product in the state: advertising. In most states, I believe, advertising is a taxable service just like most every other type of service.
They sell the people as their product. The people should be able to reclaim some of that revenue as taxes, like they do any other product. I understand why Google/Facbooke/etc. hate this, but I can't see how they have much of a foot to stand on.
Re: If the users are the Product, they should be t (Score:1)
I think the argument is advertising falls under protected speech which is a load of horseshit but may be somewhat defensible.
Re: If the users are the Product, they should be (Score:2)
I can place a sign in my front yard that says "Trump 2024" and there is no tax on it. It's clear I am trying to advertise a "product" but the ultimate difference is the commercialization such as large billboards. So, there isn't always a tax and aican generally advertise call kinds of wacky shit from my private property.
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You can up up that Trump sign, no problem, no taxes. But if you asked the Trump campaign to PAY you to display their sign, then most states would consider that a service and tax it.
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Except commercial speech has a long track record of being far less protected than other speech.
Re: If the users are the Product, they should be (Score:2)
Agreed. It shouldn't be protected. I think the blurry line begins with difference between forum based advertising and other forms of internet advertising. I think we agree, putting an ad on Craigslist shouldn't be taxed but these commercialized entities should be taxed. The question is, does the legal precedent exist for an exemption of Craigslist which precludes entities like Facebook from being equally exempt. I think this will be their argument, that Facebook is an internet forum and it's advertisements
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If you hire a lawyer in Maryland, and he bills $400 per hour, I assume you pay state taxes on his services.
It might surprise you to learn that:
Currently, only three states have a tax on legal services â" Hawaii, New Mexico and South Dakota
Admitted i had to look that up. I was aware my state does not tax legal services and expected that was likely the case for some of the others but apparently its almost all the others!
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The users are not "the product". If they were, they would be slaves. They are not slaves. QED, they are not actually being sold, and therefore they are not a product.
The product is access to users' eyeballs. This is not the same thing as making people products. Period. Learn to English.
If whoever is purchasing the advertising is not in Maryland, then the advertising is not being sold in Maryland. It is likely within Maryland's purview to tax advertising actually and literally sold in Maryland. However, they
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It is frankly offensive, and it is also annoying, because it is fundamentally false — and thereby obscures what is actually occurring. Namely, both actual people-as-products (slavery and other forced labor) and metadata-as-product are actually happening in the first world right now.
Afford ads, afford tax (Score:3)
What? (Score:3)
She should have been watching Sesame Street when young, then she'd understand why one of these things is not like the others.
Re:What? (Score:5, Insightful)
The so-called US Chamber is a nasty lobbying group that has nothing to do with your local Chambers of Commerce.
They chose that name to confuse people and trade on local Chambers' good names.
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Well why not? (Score:2)
Intellectual property is property, ain't it? It's being utilized in a commercial transaction, right?
Tax it.
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I think of Intellectual property as property just as much as virtual currency is money. But that's just me. I see accounts of people making fortunes in Bitcoin. Doesn't tempt me. I'm a low risk person. Not sure how changeable that is. I can get enough of what I want with the risks I'm willing to take.
Something *is* whatever it's regarded as. Doesn't matter whether that's by law or by public sentiment. And those can be changed.
That's the problem I have with Libertarianism. I will never put property rights ab
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> I think of Intellectual property as property just as much as virtual currency is money.
This tax is treating the virtual similarly to the "real world". It's not putting any right or property above another, it's doing precisely as you suggest and taxing intangible property as a transaction.
Now if your issue is that you oppose taxation in general, well going forward the government is going to have to find 21st century funding methods.
Comment removed (Score:4, Insightful)
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Patriotism (Score:3)
They will happily try and brainwash you about dying for your country, but they never say its worthwhile to give a cent in tax, pay with ytour life sure, but never give $1 in tax.
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Expect to see more SV influence (Score:3)
Money talks. And you can expect Silicon Valley to exert lobbying influence in many states and in D.C.
Uber, Lyft, and others got their dreams fulfilled in California's 2020 election. Fill with confidence that success brings, you can expect for them to attempt the same in multiple states by 2022. Be prepared because a region with a population of 7.7 million is going to be making choices for the other 320 million Americans.
Users willing to pay? (Score:1)
The interesting thing will be if a generation of users accustomed to "get the service for free" are willing to pay for it...
They will lose.. just like sales tax. (Score:2)
Maryland couldn't tax if the company was not in maryland and the user was not in maryland.
But if either end of that transaction is in Maryland then they can tax.
That battle was already fought and lost over sales tax, as well as excise taxes for things like cell phones. I pay taxes on my cell phone for calls I make in colorado to people in seattle.
And it just makes sense "+internet" doesnt' make something magically non-taxable.
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Thanks for pointing out that fact, though I think you have it wrong. Even with the "Internet sales tax" thing going on now, your business has to have a presence in the state before the state can collect sales tax on the purchase, and the buyer has to be in that state as well. It's not an either/or kind of thing. If I live in TN and I buy something on NewEgg, they collect sales tax since they have a presence in TN. If I am in GA and do the same, there would be no sales tax collected (yes GA has a sales t
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For sales tax that's not necessarily true. Some states levy a consumer use tax on their residents; basically you are on the hook for paying sales tax directly to the state (typically when you file your state income tax return) for purchases that normally would have been eligible for sales tax but the seller for one reason or another doesn't collect and remit it on your behalf. So it can be an either/or, depending on your state.
If you read the law [maryland.gov] there's no domicile requirement for the ad seller. In fact th
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Consumer use tax may be unconstitutional. It isn't compliant with existing Federal law/legal precedent regarding collection of tax on sales using the Internet or other mediums generally subject to the interstate commerce clause.
Maryland's bill may also be unconstutional.
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No, that's long settled
From Straight Dope:
Freddy_the_Pig
The âoeexport-import clauseâ (âoeNo state shall . . . lay any Imposts or Duties on Imports or Exportsâ) applies to international commerce, not interstate commerce. This interpretation was confirmed by SCOTUS as long ago as 1869 (Woodruff v. Parham). Put another way, the âoeimportsâ and âoeexportsâ referred to are imports and exports to or from the United States, not from one state to another. States canâ(TM)
Corporatist America (Score:4, Insightful)
Corporations suing duly elected state government, corporatist America is increasingly looking like dystopian futuristic sci-fi. Corporations should never have more rights than citizens.
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They don't, you doofus. Corporations are comprised of people and all those people have rights individually and collectively. A simple fact the Citizens United bleaters never seem to understand.
I swear, you ding-dongs read too many scifi books and let your imaginations run away with you. I tell you what - move to fucking Mogadishu or some other place that's a _real_ dystopia and maybe you can quit clutching your nerd-perls over dumb shit like this.
Probably not the right way (Score:2)
They should be taxed the same as any other advertising, however that works. But I don't think it should happen on the state level. The internet is not a physical place stuff that happens on the internet doesn't really happen in any given jurisdiction. I think the most practical way to handle it is to base it off of where the owner of the site or service is located. For tax purposes it may be even better to just do that on the federal level since its almost always interstate commerce or international commerc
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At any rate, balkanization through individual states coming up with their own different taxes for online services is a terrible idea. Make one regulation and stick to it.
Some states in the US don't even have a uniform sales tax for physical goods and services within their own borders, and the rate changes when you cross city/county lines...
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They should be taxed the same as any other advertising, however that works.
That sounds sensible, but probably ignores the 'shape' of the market, which is why Maryland felt the need to introduce the bill in the first place.
I think the most practical way to handle it is to base it off of where the owner of the site or service is located.
Again that sounds sensible, until one devotes just a moment's thought to the likely end result of that: "Alphabet today announced its latest spin-off, GoogleAdsCorp, which will assume responsibility for all its online advertising business. The new corporation is to be based in the tax haven of Oligarchistan. 'I'm really excited by the opportunities this offers, t
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That sounds sensible, but probably ignores the 'shape' of the market, which is why Maryland felt the need to introduce the bill in the first place.
I believe Maryland felt the need because 2020 was a bad year for tax revenues and many states are already in the red. We are seeing and will continue to see creative tax schemes from multiple states as a way to make up for the losses.
Again that sounds sensible, until one devotes just a moment's thought to the likely end result of that: "Alphabet today announced its latest spin-off, GoogleAdsCorp, which will assume responsibility for all its online advertising business. The new corporation is to be based in the tax haven of Oligarchistan. 'I'm really excited by the opportunities this offers, the consolidation of our core business functions should enable much more efficient consumer inclusion metrics and market diversification' said an unnamed source at the new company".
Allowing that is a failure of the regulatory bodies. In this case it would be incumbent on the IRS to call bullshit and collect taxes.
Like Sales Taxes? In truth it's a long time since this was an issue, so I don't recall how it turned out but: Aren't businesses that sell online to the various states already responsible for charging the appropriate rate of sales tax? Why should taxes being applied to a different revenue stream be treated any differently by the States?
Sales tax is different on a practical level. You know the location of the person buying goods online because a billing and shipping address as a
"small" business? (Score:2)
$100 million and up is hardly what I'd call a "small business"...
What ads?? (Score:2)
Between Pi-hole [pi-hole.net] and uBlock Origin I don't see any ads. None. And I haven't for years.
You people are supposed to be technologically savvy. If you hate ads, why haven't you done something about it to improve you own situation? This is a technology problem that's been solved for a long time now.
Just the neverending _whining_. (Score:2)
Jesus Christ. I will never for the life of me understand this vitriol towards Facebook, Google, et al. You know what they are. If you don't like it, don't fucking use it. And don't give me this silly "but muh friends!" or the equally silly "but muh tracking pixels even if I don't use Facebook!". It's like talking to fucking children. Facebook has 0 negative consequences for your life if you just ignore its existence.
Personally, I just browse it and don't post shit because only idiots expose their crackpot p
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You're a fool. Also, you are a product that is being marketed with no recompense. They make money on selling us... why shouldn't they pay us for that usage?
And that's before I start on the uttr, complete, incompance of the UI of faceplant, so bad that I would prefer htey let M$$$ redo the whole thing... and i *hate* M$.
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Which part of "we give you these services in exchange for your eyeballs" do you _not_ understand? They are fucking paying us - with a free communications platform which you are entirely free to use or not use.
I tell you what - for all the bleating on this I'm sure someone can come up with a Facebook|Twitter|Whatever that you _pay_ to use and which doesn't advertise or monetize you. You just go do that, I'll be on the sidelines laughing at you when people, en masse, _choose_ to still use the ad supported ver
Seems to make sense... (Score:1)
Let's presume the ad claims that their product is worth buying somehow.
The seller of the ad space considers that the advertiser has freedom of speech.
If you expect protection of this Constitutional Right, then you must pay taxes for the government to be able to defend this right.
So shut the fuck up and pay the fuck up!
I am already paying too many taxes to cover corporate loopholes!
Have some respect a