Indiana lawmaker wants to tax social media apps to stop bullying, suicides

(The Center Square) – An Indiana lawmaker has filed a bill to tax advertising revenue from social media networks to fund a new program to prevent suicides and cyberbullying.

State Rep. J.D. Prescott, R-Union City, filed House Bill 1517 in the state House of Representatives earlier this month. If passed, it could generate upwards of $170 million in new revenue for the state annually.

The purpose of the bill is two-fold. Any social media platform with more than 1 million active account holders in Indiana, generates at least $1 million in ad revenue from the state and gains financially from the data created by Hoosier users would be taxed.

The tax would be based on the app’s calendar year ad revenues, multiplied by 7%. The apps would also pay $1 for each active account in the state.

According to the fiscal note attached to the bill, in the fiscal year 2025, the social media tax could generate between $118.5 and $173.9 million. That money would go to the Online Bullying, Social Isolation and Suicide Prevention Fund, which the Division of Mental Health and Addiction would oversee.

Federally funded researchers have found some links between online bullying and contemplating suicide. A National Institutes of Health-backed team led by Dr. Ran Barzilay at the Children’s Hospital of Philadelphia tracked data from 10,000 teens and tweens who were already involved in a study on brain development.

Barzilay’s team, according to NIH, found about 9% of the youth were targets of cyberbullying, and those individuals were four times more likely to report thinking about or attempting suicide.

Jared Walczak, the vice president for state projects at the Tax Foundation, noted Maryland was the first state to pursue taxes on social media and digital advertising and that state’s law is still being challenged in the courts.

Other states, both Democratic- and Republican-controlled, have since looked into such levies either because they perceive the companies as wealthy or they disagree with certain policies. However, Walczak said the Indiana bill presents a different, but not a compelling, case.

“This looks a little more like an excise tax, where it is addressing an externality associated with social media and taxing it, but the link is extremely weak,” Walczak told The Center Square. “Taxation is a very inefficient way for policymakers 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 applications or websites created by ByteDance Limited or Tencent Holdings, their Chinese-based developer, on devices owned or operated by the state.

TikTok and WeChat are already banned from most state-controlled devices. The Indiana Office of Technology announced that move last month. Graig Lubsen, IOT’s director of communications and external affairs, said the department provides support for most state agencies.

“The decision was made as part of IOT’s regular review of system security,” Lubsen said in an email. “IOT is constantly testing the state system and making sure that the integrity is intact.”

Prescott’s bill received an initial reading and has been referred to the House Committee on Government and Regulatory Reform.