A Maryland state tax court has struck down the state’s first-in-the-nation tax on digital advertising, ordering state officials to repay the tax money already collected from big tech firms.
Background of the Case
The Maryland Tax Court said the tax violates the federal Internet Tax Freedom Act as well as the First Amendment and the commerce and due process clauses of the U.S. Constitution. The law taxed revenue that large companies make on digital advertisements shown in Maryland, with companies making more than $100 million in global annual gross revenues taxed at a 2.5% rate.
The legal fight has been watched by other states that are considering taxes for online ads. Maryland estimated the tax, approved in 2021, could raise about $250 million a year to help pay for a sweeping K-12 education measure.
Reaction to the Ruling
Supporters of the law contended that Maryland needed to overhaul its tax methods in response to significant changes in how businesses advertise. However, attorneys representing Big Tech companies, including Meta and Amazon, challenged the law in multiple legal venues, arguing in part that they were unfairly targeted.
Maryland Senate President Bill Ferguson and House Speaker Joseline Pena-Melnyk, both Democrats, issued a statement saying they “respectfully disagree” with the tax court ruling and expect the legal process to continue.
Original reporting: KTBS 3 (Shreveport) — read the source article.
