FROM THE
Unleash Prosperity Hotline

Another Blue State Targets Big Tech and Social Media

Another of life’s great mysteries is why so much of Silicon Valley and the tech world funds liberals who want to destroy them.

Take Illinois Gov. J.B. Pritzker, a man who never met a tax increase he didn’t embrace, got his wish this week.

Pritzker just approved four new taxes targeting digital advertising, prediction markets, investors in cryptocurrency, and social media platforms. They are projected to raise over $800 million a year in revenue.

Illinois will also become the first state to charge social media companies a fee based on their number of users. Companies with between 100,000 and 500,000 users in Illinois will pay 10 cents per month, excluding the first 100,000 users. Companies with more than 1 million users will pay $165,000 plus 50 cents per user per month after the first million.

One problem is that a digital user tax based on audience size or reach is likely to be found unconstitutional on First Amendment grounds.

In 1983, the U.S. Supreme Court threw out a Minnesota law on ink and paper used by large newspapers. It ruled that a differential taxation of the media targets certain outlets and risks chilling the distribution of information. Online media is the modern equivalent of pen and ink in the 1980s.

It also likely runs afoul of the 1998 Internet Tax Freedom Act authored by Chris Cox, which prohibited states from imposing discriminatory taxes on the Internet. Maryland’s digital ad tax has seen years of litigation on this issue.

The tech companies fight these tax grabs in the courts, which raises the question why so many tech firms naively believe that liberals are their friends and why they still deliver such large contributions to them.

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