Washington's digital ad tax is unwise, discriminatory and illegal | Opinion

"Case in point, digital advertising costs are about to jump roughly 10% for Washington businesses thanks to a record tax package rammed through the legislature last spring. In total, the new tax package is expected to generate more than $9 billion to prop up state spending in the current budget. Just over one billion will come from extending the retail sales tax to "advertising services" and several high-tech categories (IT support, custom software and website development, security, temporary staffing, and more)."

"In what can only be described as an obvious response, Comcast is suing the state over it. The complaint argues the advertising provision violates the federal Internet Tax Freedom Act ( ITFA), which forbids states from imposing taxes that discriminate against "electronic commerce." Taxing online advertising while exempting most traditional media is a textbook example of what the federal law was designed to preclude. The company is asking the court to declare the law invalid and stop Washington from enforcing it."

"A similar digital advertising tax in Maryland is in the midst of a multi-year legal battle over its constitutionality. Rulings to date have found the tax unconstitutional. The legal uncertainty and novelty of the tax should have given legislators pause. Relying on a tax that may ultimately be repealed to fund essential services is spectacularly foolish."

Washington enacted a record tax package that extends the retail sales tax to digital "advertising services" and several high-tech categories, raising digital advertising costs by roughly 10% for businesses. The package is projected to generate over $9 billion for the current budget, with just over $1 billion from the expanded advertising and tech tax base. Most non-digital advertising remains exempt, advantaging legacy media and disadvantaging internet-based ads. Comcast has sued, arguing the provision violates the federal Internet Tax Freedom Act by discriminating against electronic commerce. A similar Maryland tax faces multi-year legal challenges and rulings finding it unconstitutional.

Read at Tacoma News Tribune