Nonpartisan Legislative Services: House Bill 732 Is A $250 Million Tax
Maryland Department Of Legislative Services Estimates Proposal Could Bring The State Up To $250 Million In New Tax Revenue In Its First Year Of Implementation (“House Bill 732,” Maryland Department Of Legislative Services, 4/7/20)
Nonpartisan Analysis Estimates Digital Advertising Tax Could Raise $250 Million In New Taxes Annually. (Pamela Wood, “Proposal To Tax Digital Ads To Help Maryland Pay For Education Is Met With Skepticism, Opposition,” The Baltimore Sun, 1/30/20)
Study: Digital Advertising Tax Could Cost Maryland Consumers $135 Million
According To A Study By Deloitte Tax, Which Looked At The Digital Advertising Tax That Was Enacted In France, 55% Of The Burden Would Be Passed On To Consumers. “The increased tax burden will mostly be borne by consumers and businesses that use digital marketplaces – not large tech companies. We expect the large internet companies to pass on the increased tax burden. This will result in higher prices for consumer goods, and a reduced profit for businesses using digital platforms.(Julien Pellefigue, “The French Digital Service Tax: An Economic Impact Statement,” Deloitte, 3/22/19)
- The Tax Foundation Estimates That The Digital Advertising Tax Would Result In Maryland Consumers Paying An Additional $135 Million For Goods And Services. “A study of the French digital advertising tax concluded that 55 percent of these advertising costs would ultimately be passed along to end consumers, which, if applied to the Maryland tax, would result in more than $135 million of the revenue coming from Maryland consumers. The French tax and Maryland’s proposed tax are not identical, but lawmakers must accept that, whichever out-of-state businesses may be the intended targets of the tax, much of the economic burden will fall on Maryland businesses and consumers.” (Jared Walczak, “Worse Than Advertised: The Legal And Economic Pitfalls of Maryland’s Digital Advertising Tax,” Tax Foundation, 3/16/20)
Bill Sponsor Senate President Bill Ferguson Conceded Tax Will Be Paid By Marylanders
Senate President Bill Ferguson Admitted That The “Reality” Of The Digital Advertising Tax Is That Businesses Would Pass Increased Costs Maryland Businesses And Consumers. SENATOR FERGUSON: “I think businesses throughout history have demonstrated an adeptness to passing through taxes. That is a reality of the system.” (“Senate Budget And Taxation Committee: SB 2 Public Hearing,” Maryland General Assembly, 1/29/20)
Governor Hogan, Small Business Leaders, Tax Fairness Advocates, Agree With Senate President Bill Ferguson On “Reality” Of Ad Tax
Governor Hogan Called The Digital Advertising Tax “Misguided,” Stated That It Would Be “Unconscionable” To Raise Taxes When So Many Marylanders Are Struggling. “These misguided bills would raise taxes and fees on Marylanders at a time when many are already out of work and financially struggling. With our state in the midst of a global pandemic and economic crash, and just beginning on our road to recovery, it would be unconscionable to raise taxes and fees now. (Letter, Re: 2020 Vetoes, Maryland General Assembly, 5/7/20)
Ashley Duckman, Vice President Government Affairs, Maryland Chamber Of Commerce: The Economic Burden Of The Digital Advertising Tax “Will Be Felt Most” By Maryland Businesses And Consumers. “We have heard that the intended target for this is global corporations, but make no mistake that the real impact will be on Marylanders who use advertising services within a digital interface. We know that advertising service providers will pass on those costs to customers and that will include my small business members that utilize online platforms to promote their products, their services, and they also use them to reach new customers.” (“Senate Budget And Taxation Committee: SB 2 Public Hearing,” Maryland General Assembly, 1/29/20)
Matt McDermott, President American Advertising Federation Of Baltimore: “The bill is attempting to snipe global media behemoths for quick cash. Instead, it waves a bazooka in their general direction, leaving room for severe collateral damage to our business throughout the region.” (Matt McDermott, “Taxing Digital Ads To Finance Education Would Be A Serious Mistake,” The Baltimore Sun, 1/24/20)
The Tax Foundation: The Digital Advertising Tax Would Hurt Many “Small Businesses Imperiled By The COVID-19 Pandemic.” “Although the bill ostensibly targets large technology companies and advertising platforms, much of the burden would fall on Maryland businesses and consumers, and the timing couldn’t be worse…. It is pleasant for many to think that this tax will just be borne by profitable tech companies somewhere out west, but what might be pleasant suffers from the disadvantage of being untrue. The reality is that much of the burden will fall on Maryland businesses, many of them small businesses imperiled by the COVID-19 pandemic.” https://taxfoundation.org/governor-hogan-vetoes-maryland-digital-advertising-tax-legislation/
- The Tax Foundation Argued The Digital Advertising Tax Will Not Only Impact Large Corporations, But Also Small Businesses And Maryland Consumers. “If the tax costs of advertising into Maryland rise, those costs will be passed on to advertisers, and many of those advertising to Maryland residents will themselves be Maryland-based businesses. This isn’t a tax on corporate behemoths a continent away; it’s a tax on local restaurants and other small businesses advertising to reestablish their customer bases once the economic recovery begins. And to the extent that the tax falls on all such Maryland businesses, not only will much of the cost be imposed in Maryland, but some of it also will be passed along to consumers themselves.” (Jared Walczak, “Gov. Hogan Vetoes Maryland Digital Advertising Tax Legislation,” Tax Foundation, 5/7/20)
Association Of National Advertisers: The Governor’s Veto Helps Protect Nearly 400,000 Maryland Jobs. “At a time when businesses are facing unprecedented challenges amid the COVID-19 pandemic, Governor Hogan’s decision will substantially help Maryland consumers and businesses. This tax now will not be passed on to consumers. The veto of this counterproductive proposal is an important victory for ANA and our members. It relieves small and large businesses of a major burden on their efforts to market their products and services, which in turn helps protect the almost 400,000 Marylanders whose jobs are supported by the sale of products and services generated by advertising – nearly 15 percent of the 2.6 million jobs in the state.” (Press Release, “Association Of National Advertisers Commends Maryland Governor Larry Hogan’s Veto Of The Maryland Digital Ad Tax Bill,” Association Of National Advertisers, 5/7/20)