Maryland's Internet Advertising Tax Is Taking Aim At The Wrong People

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Photo: Scott Barbour (Getty Images)

Folks, we don’t need to tell you the internet is bad. But what if we told you that the internet’s inherent badness could... be used to pay for children’s education.


Here’s the rundown: two Maryland lawmakers—Senate Presidents Bill Ferguson and former Senate President Thomas V. Mike Miller—pitched the idea of taxing digital ads to a congressional committee as a way to fund children’s schooling. Taxing this multi-billion dollar industry was pitched as a way to earn—by their own analysis, roughly $250 million for statewide educational reforms.

If you don’t think too hard about it, the idea has some appeal. In recent years Baltimore’s been plagued by reports of schools failing its children educationally or straight up needing to be shut down for broken and decaying infrastructure. A recent article in the Baltimore Sun pegged these schools as falling incredibly short of the funding they needed to function—by about $290 million, to be exact.

For context, that’s something that Jeff Bezos could easily pay off in about two days (with money to spare)! Why shouldn’t his multi-billions in ad revenue go towards paying for these schools—especially since some of that money’s being made off of Baltimore residents?

Off the bat, maybe the biggest issue is that it’s ridiculously broad. Much like other legislation intended to reign in the digital advertising giants, the way Maryland’s proposed tax is written understands advertising on a 1:1 scale: Advertisers are clearly pouring millions of dollars into Google and Facebook’s pipes to have their ads show up in social media feeds and search engines, and it makes sense that those earnings should be taxable.

But the thing is, digital advertising isn’t one-to-one. It’s more like 1:1,000. Between every Nike ad you see online and the Nike advertiser that paid to get that ad in front of your eyeballs, there can be dozens and dozens (and dozens) of partners automating everything from the way those ads are targeted to making sure that you’re a real human, not a bot. Here’s a taste of the more than 7,000 partners working in the digital ad ecosystem right now—aside from the Big Tech Baddies.

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Screenshot: LUMA Partners

The worst part is that the ubiquity of advertising companies can result in a finger-pointing war about who’s “serving” the ad in the first place. Technically, for example, you could say a web publisher (like Gizmodo dot com) would be “serving” an ad, since the ad is—get this—served on our site.

But because we web publishers are at the end of this digital clusterfuck, we already have a ton of money skimmed off by those players in the middle. In 2019 alone, that skim was nearly a third of the total cash your brand of choice paid to appear at the top of this screen—and it’s going to continue to rack up, by most estimates, with or without Maryland’s senators bumbling their way into the process.


This isn’t to say taxation on big tech, like the senators are proposing, would be a bad thing. We already know that there are plans to crash the legal loopholes that the world’s Zuckerbergs and Bezoses use to jigger their earnings between countries and currencies so they can keep earnings high and taxes low. But maybe attacking these companies through their digital ad biz isn’t the way to do it—at least until they understand how that ad biz actually works.



Who would these senators target? The website presenting the digital ad to eyeballs in Maryland? The company that purchases ad space if they are based in Maryland? Is mobile included? Is the Bezos/Zuckerberg monster going to be taxed directly? I’m guessing the answer is that anyone old enough to be a senator doesn’t know how the internet or ads work.