Maryland judge strikes down nation’s first tax on digital advertising

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ANAPOLIS, MD – The nation’s first tax on digital advertising was ruled unconstitutional by a Maryland judge on Monday. It’s a law that lawyers for Big Tech oppose unfairly targeting companies like Facebook Meta,
Google Google,
and Amazon AMZN,
in a different federal matter against the same law

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Anne Arundel County Circuit Court Judge Alison Asty said the Maryland law violates the US Constitution’s prohibition on state interference with interstate commerce. It also ruled that it violates the federal Internet Tax Freedom Act, which prohibits discrimination against electronic commerce.

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The state estimates digital ads to help pay for a comprehensive K-12 education measure to expand early childhood education, increase teachers’ salaries, boost college and career readiness, and help struggling schools But taxes can raise about $250 million per year.

Raquel Combs, a spokeswoman for Maryland Attorney General Brian Frosh, said the attorney general’s office is reviewing the decision to determine next steps. Spokesperson Susan O’Brien said Comptroller Peter Franchot’s office is also reviewing the decision.

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Verizon Media Inc. VZ,
and Comcast CMCSA,
Challenged the law in state court. The law is also being challenged in federal court by the US Chamber of Commerce. Oral debate in that case is scheduled for November 29.

The fate of Maryland law in the courts is being closely watched by other states, which have weighed a similar tax for online ads.

The law was enacted last year by the Maryland General Assembly, which is controlled by Democrats over a veto of Republican Gov.

The law would have taxed the revenue that affected companies make on digital ads shown in Maryland.

The tax rate would have been 2.5% for businesses earning more than $100 million in global gross annual revenue; 5% for companies making $1 billion or more; 7.5% for companies making $5 billion or more and 10% for companies making $15 billion or more.

Republican lawmakers on Monday cheered the judge’s decision as “a huge victory for Maryland’s small businesses that rely on affordable digital advertising to market their services.”

Brian Simonaire, Senate Minority Leader, said, “This is a recent investigation into Maryland’s Democratic supremocracy, which has no problem creating a new, one-of-a-kind tax that violates the First Amendment and allows Maryland’s job creators from business.” puts it out.” , and Sen. Justin Ready, Senate Minority Whip, in a joint statement.

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