Lincoln Journal Star Deb Peters January 31, 2024
“It’s that time of year again, and legislatures are back in session.
“As a former state legislator from neighboring South Dakota and past president of the National Conference of State Legislatures, I am very familiar with the demands of a legislative session.
“Deals are cut, there’s some thoughtful debate, and at times there will be fierce disagreement. I also know that given these demands, legislators can overlook certain bills and not consider their true impact.
“That is why I am writing, to sound the alarm and urge legislators to reject LB1354, a tax on digital advertising.
“This bill is a bad idea. It’s bad for Nebraska’s business community, bad for consumers and will damage the state’s reputation as a great place to do business.
“Just so there is no confusion, this bill will increase the cost of doing business, it will increase the costs of goods and services, and it will affect businesses of all sizes and people from all walks of life.
“Advertising is a major economic driver in Nebraska, generating $39.5 billion in annual economic activity and supporting 208,000 jobs. This proposal takes direct aim at this industry.
“Over the past decade, nothing has leveled the playing field for small businesses and “mom and pop” shops more than digital advertising. Fortune 500 companies are not the only businesses that utilize digital advertising. There is hardly a business in existence today that does not use some kind of digital strategy to reach their customers. Digital advertising allows local farmers and Main Street businesses to compete with global brands for customers.
“Many digital advertising platforms are either completely free or charge a nominal cost. They are also highly accessible in terms of technology and user experience. Even a one-person operation now has the opportunity to promote their business online and generate paying customers, simply by using an app on their smartphone.
“Taxing digital advertising is extremely misguided. It won’t impact just a handful of multi-billion-dollar businesses as stated by the prime sponsor. Instead it will adversely impact every single business that advertises online in Nebraska.
“We know from research conducted by Deloitte — and just plain common sense says — these taxes will be passed on to small businesses and further down to their consumers. I’m sure that is not the true intention of this bill, but that will be the ultimate outcome.
“I’m well versed in tax policy. I am a Certified Public Accountant. I fully understand online tax policy, especially when it involves online marketplaces. I was the driving force behind the U.S. Supreme Court Decision of S.D. vs Wayfair, which required remote sellers, such as online businesses, to collect and remit sales taxes on in-state sales.
“There’s a big difference between making sure that everybody is paying the same taxes on the same set of products (which is what that court case accomplished) and what is being proposed in this bill.
“LB1354 doesn’t undo an unfair playing field; it creates an unfair playing field. This is the very definition of discrimination by taxation. As written, LB1354 exempts news media entities from this tax while making businesses with $1 billion in revenue assess the tax to everyone that uses their services.
“In America, advertising has essentially never been taxed because it’s always been understood to be a business input — a business expense. It is very surprising that a strong conservative state like Nebraska would embrace such an anti-business proposal that is nearly identical to a law championed by left-wing legislators in deep blue Maryland.
“Historically, states with Republican leadership have been successful in lowering taxes by cutting spending or reducing the size of government — not by shifting costs and stealing a page out of the Democrats’ playbook to pick winners and losers.
“There is never a good time to increase taxes on small businesses or consumers, especially now. With inflation and high interest rates elevating a risk of recession, Nebraska is projected to see only “modest” growth over the next couple of years. This is even more of a reason why state legislators must take extreme caution and reject LB1354.
“It’s up to you, Nebraska. Keep your state more economically competitive and attractive to small businesses and entrepreneurs. Do not create more barriers to economic growth.”