Tax Fake News

Economic theory—and taxation—could help curb misinformation

Traditional and social media outlets have failed to halt the spread of fake news—or the term’s weaponization. In an effort to help the truth fight back, Marshall Van Alstyne, a professor of information systems, has proposed a radical idea borrowed from economics: a Pigouvian tax on negative externalities. Named after the English economist Arthur Pigou, this tax is commonly applied to deter negative behaviors, such as putting an extra levy on cigarettes. And just as companies are taxed for the air pollution they create, Van Alstyne believes that producers of fake news should be taxed for the damage they cause beyond their platforms.

He says the harm fake news producers cause others—and the monetary value of that harm—could be decided by an independent body, comparable to a nonpartisan, judicial body. “You could sample messages, find out some proportion of false and damning information, and then tax in proportion to the damage that’s being done.”

Van Alstyne insists, though, that this would not be a tax on free speech. “What you’re doing is you’re taxing the damage. You’re not taxing the speech.”

Van Alstyne says another solution would be to put friction on the liars themselves, not just the lies they promulgate, perhaps by temporarily suspending their social media accounts or limiting the number of people who can follow them. He also says the most realistic solution probably already exists: currently, viewers can see who pays for a political advertisement, be it on television or radio; Van Alstyne proposes applying this same labeling mechanism to social media platforms.