The digital ad world on Friday moved one step closer to what some are certain will be its death: taxes. As my colleague Wendy Davis reported last last week, Maryland is poised to become the first state to begin taxing the advertising sales of big digital media companies.
Maryland’s tax scheme, which is only attributable to advertising sales derived from the state, raises many questions about the physical proximity of online media that certain geographies -- you know, Silicon Valley and Madison Avenue -- have ignored or sought to sidestep for decades.
Unlike digital commerce taxes, which can be explicitly tied to the delivery of goods and services in geographic locations, the idea of taxing something whose geography is based in the cloud will likely be something debated in the inevitable legal appeals to Maryland’s new law, especially as other states, municipalities, and or nation states looks at similar moves to raise revenues by tapping one of the most sustainable gravy trains, as many traditional industrial taxes bases strain under the weight of a global pandemic.
It’s a second big real-world geographic threat to emerge in recent weeks for big digital media platforms, following Australia’s new law requiring Google to negotiate deals with news publishers for their content that Google distributes Down Under.
Nation states, including France, meanwhile, have once again begun to raise the idea of taxing big digital platforms for advertising sales they can attribute to their sovereignty.
If and when any of these tax schemes are actually put in place, it will be interesting to see how digital advertising platforms try to counter the attribution models used to tax them, especially if they try to base them on, you know, the last click.