U.S. eyes flurry of new taxes on Amazon, Facebook and Google, trying to force tech to pay its ‘fair share’

Maryland voted to adopt a new tax targeting online advertising on Friday as states nationwide take fresh aim at an industry that has posted billion-dollar profits during the pandemic

State lawmakers across the country are exploring a range of new taxes targeting Amazon, Facebook, Google and other Internet giants, seeking to capture some of Silicon Valley’s eye-popping profits and soaring share prices in the midst of the coronavirus pandemic.

Even as the U.S. economy struggles to regain its footing, some of the tech industry’s most valuable companies have thrived as Americans spend more time — and money — shopping and communicating on the Web. The disparity has caught the eye of policymakers across the United States who increasingly say it is time for the Internet’s cash-flush companies to start paying their fair share.

The tension has been on public display this week in Maryland, where Democrats in the state’s legislature launched a first-in-the-nation tax on online advertising on Friday. Their vote, which overrode an earlier veto from Republican Gov. Larry Hogan, could raise $250 million to fund state education restructuring initiatives, its principal backers estimate.

The looming tax has drawn sharp opposition from a wide array of businesses, including Amazon, Facebook and Google, which have lobbied through industry coalitions, including the Internet Association. The group and its allies have blitzed the airwaves with ads in recent months, and they are expected to support an imminent lawsuit to stop the tax from taking effect. They argue Maryland is prohibited under federal law from assessing such levies on Internet companies in the first place.

The clash carries immense national implications at a time when states are struggling to balance their budgets and front the ever-rising costs of a national public-health emergency. The scramble to raise new money — and the newfound interest in taxing tech — reflects a growing belief among government officials nationwide that Silicon Valley for too long has failed to share the bounty of its unrivaled economic growth.

“Right now, they don’t contribute,” said Sen. Bill Ferguson (D-Baltimore City), the chief sponsor of Maryland’s tax proposal. “These platforms that have grown fast, and so enormously, should also have to contribute to the civic infrastructure that helped them become so successful.”

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The renewed push in Maryland and across the country has coincided with another record-breaking earnings season in Silicon Valley and beyond. Amazon this month reported more than $125 billion in fourth-quarter revenue, marking the most lucrative three-month run in its history. Facebook raked in more than $28 billion over that same period, and Google took in nearly $57 billion, in both cases dwarfing analysts’ quarterly estimates. (Amazon founder and CEO Jeff Bezos owns The Washington Post.)
Wall Street has rewarded Silicon Valley’s strong returns handsomely, as these companies boast sky-high share prices that make them some of the most desirable stocks to own — and the most valuable firms in the world. But the industry’s immense gains also have fueled a renewed global debate over its financial responsibilities amid the worst economic downturn since the Great Depression.

In France, for example, government officials in recent months have sought to tax Apple, Google and other tech behemoths anew out of a belief that they dodge their dues. The companies have opposed the new taxes, which nearly sparked a trade war between France and the United States under the Trump administration. Last month, though, then-treasury secretary nominee Janet Yellen endorsed France’s calls for a global deal on taxing these firms.

In the United States, state policymakers are starting to sound a similar note: Democrats and Republicans alike have put forward a host of measures that seek to take more direct aim at Silicon Valley’s bottom line. MultiState, a government relations firm that tracks local legislatures, says it is eyeing at least 17 bills in 10 states that aim to impose taxes on tech giants, their profits, the data they collect and the services they offer.

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Kansas Gov. Laura Kelly (D) in recent days has proposed raising $97 million in new taxes that could apply to online streaming services such as Netflix and Hulu. Democratic lawmakers in Washington state, meanwhile, have sought to tax companies that sell consumers’ personal data as part of a broader push this year to protect state residents’ privacy online.

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