"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."
Washington enacted a record tax package expected to raise over $9 billion for the current budget, including roughly $1 billion by extending the retail sales tax to advertising services and several high-tech categories. The change will raise digital advertising costs for Washington businesses by about 10%. Most non-digital advertising remains exempt, advantaging legacy media such as radio, TV, and newspapers while disadvantaging internet-based advertising. Comcast sued, arguing the provision violates the federal Internet Tax Freedom Act by discriminating against electronic commerce and asking a court to block enforcement. A similar Maryland tax faces multi-year litigation and rulings finding it unconstitutional, creating legal and fiscal uncertainty and risking business relocation to lower-cost states.
Read at Tri-City Herald
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