Maryland’s Digital Advertising Tax Ruled Unconstitutional

Maryland is the first state to impose a tax on digital advertising services – now the Anne Arundel Circuit Court has declared Maryland’s digital advertising tax as unconstitutional. Governor Hogan vetoed the law, however state lawmakers overrode the Governor’s veto last year. The tax, which also is being challenged in federal court, would tax income from internet ads – ranging from 2.5% to 10% depending on the companies over all revenue and was expected to bring in $250-million for Maryland’s public schools – to expand pre-K, improve teacher’s pay and improve programs that prepare students for career and college.
Anne Arundel Circuit Court Judge Alison Asti ruled the law violates the U.S. Constitution’s prohibition on state interference with interstate commerce. She also ruled that it violates the federal Internet Tax Freedom Act, which prohibits discrimination against electronic commerce.