(The Center Square) — An Indiana lawmaker has introduced a bill to tax advertising revenue from social media networks to fund a new suicide and cyberbullying prevention program.
State Representative JD Prescott, R-Union City, filed House Bill 1517 in the state House of Representatives earlier this month. If passed, it could generate more than $170 million in new revenue for the state each year.
The objective of the bill is twofold. Any social media platform with more than 1 million active account holders in Indiana, generates at least $1 million in advertising revenue from the state and earns financially from data created by the Hoosier users would be taxed.
The tax would be based on the app’s calendar year advertising revenue multiplied by 7%. Apps would also pay $1 for each active account in the state.
According to the tax memo attached to the bill, in fiscal year 2025, the social media tax could generate between $118.5 million and $173.9 million. That money would go to the Online Bullying, Social Isolation and Suicide Prevention Fund, which the Mental Health and Addictions Division would oversee.
Federally funded researchers have found links between online bullying and suicide contemplation. A National Institutes of Health supported The team led by Dr. Ran Barzilay at Children’s Hospital of Philadelphia tracked data from 10,000 teens and tweens who were already taking part in a brain development study.
Barzilay’s team, according to the NIH, found that about 9% of young people were the target of cyberbullying, and these people were four times more likely to report having thought about or attempted suicide.
Jared Walczak, vice president of state projects at the Tax Foundation, noted that Maryland was the first state to implement social media and digital advertising taxes and that state law is still being challenged in court. .
Other states, both Democrats and Republicans, have since looked at these levies, either because they perceive corporations to be wealthy or because they disagree with certain policies. However, Walczak said Indiana’s bill presents a different, but not compelling, case.
“It’s a bit more like an excise tax, where it deals with an externality associated with social media and the tax, but the link is extremely weak,” Walczak told The Center Square. “Taxation is a very inefficient way for policy makers to address concerns about bullying.”
Prescott could not be reached for comment.
The bill also seeks to ban TikTok and WeChat, as well as any other mobile apps or websites created by ByteDance Limited or Tencent Holdings, their China-based developer, on state-owned or operated devices.
TikTok and WeChat are already banned on most state-controlled devices. The Indiana Office of Technology announced the decision last month. Craig Lubsen, director of communications and external affairs for IOT, said the department provides support to most state agencies.
“The decision was made as part of IOT’s regular security review of the system,” Lubsen said in an email. “IOT is constantly testing the state system and ensuring the integrity is intact.”
Prescott’s bill received first reading and was referred to the House Committee on Government and Regulatory Reform.