USA: Discriminatory Digital Ad Tax in Maryland found unconstitutional

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Judge Alison Asti of Anne Arundel County Circuit Court declared the Digital Advertising Gross Revenues Tax to be unconstitutional. The law was challenged in federal court by the US Chamber of Commerce through a filed complaint by Comcast of California Maryland and Verizon Media Inc. Thus, the judge decided to set the law in a bench ruling.


Digital Ad Tax


Maryland is the first and only state that passed a law in February 2021 imposing a tax on digital advertising where it wants to tax the revenues of major communications and technology firms. It aims to tax the part of the economy that resides between the platform and the users by substituting gross revenues. The tax took effect on 1 January 2022.


The court favored plaintiffs challenging the tax based on the following:


  • The law violates the Permanent Internet Tax Freedom Act from taxing digital goods and services while exempting their non-digital equivalents from taxation.
  • The law violates the Commerce Clause of the Constitution for rates are calculated based on total global digital advertising receipts, and they are intended to be paid almost completely by companies that don’t just operate in Maryland and
  • The law violates First Amendment from taxes that target the news media represent unconstitutional violations according to U.S. Supreme Court and Maryland state legal precedent.



Source: ntu.org

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