Free State Foundation President Randolph May and I have written previously about Maryland House Bill (H.B.) 732, a misguided attempt to fund costly education proposals through a tax that singles out digital advertising. H.B. 732 awaits action, ideally in the form of a veto, by Governor Hogan.
On March 13, New York State Senator and Deputy Majority Leader Michael Gianaris (D – Twelfth Senate District) introduced a near word-for-word copycat bill. Senate (S.) 8056 tracks H.B. 732 down to its reference to the "comptroller," despite the fact that, in New York, the relevant agency is the Department of Taxation and Finance.
However, S. 8056 does deviate from H.B. 732 in one key respect: it applies only to digital "advertising services ... that use personal information about the people the ads are being served to." This is noteworthy given the inspiration behind H.B. 732: a proposal by economist Paul Romer designed to end the use of targeted advertising through the imposition of a punitive tax.
More recently, New York State Senator Kevin Thomas (D – Sixth Senate District) on April 13 unveiled legislation that would tax digital advertising in order to fund zero-interest student-loan debt refinancing. Rather than establishing a separate tax, S. 8166 would include digital advertising within the sales tax base.
These proposals are unlikely to survive judicial challenge. Should they become effective, unintended but foreseeable economic consequences will overshadow their hoped-for benefits. New York lawmakers therefore should look elsewhere for additional revenue.
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