Anne Arundel County Circuit Court Judge Alison Asti held during an October 17 motions hearing in Comcast v. Comptroller that the state’s tax violates the Internet Tax Freedom Act, the federal commerce clause, and the first amendment. Judge Asti concluded that digital advertising is similar to traditional advertising, finding that the tax was discriminatory under the ITFA. She also held the tax violates the commerce clause raising issue with the rate being calculated on the worldwide income on all sales, not just advertising.
As reported by the Baltimore Sun,
Maryland lawmakers overrode Gov. Larry Hogan’s veto to pass the law last year, which aimed to tax Big Tech’s income from internet ads and was expected to bring in up to $250 million for the state’s public schools. The taxes imposed on digital advertising services were based on companies’ overall revenues, with rates ranging from 2.5% for companies bringing in more than $100 million a year to 10% for companies making more than $15 billion.
The money raised was slated to go to expand prekindergarten, bump educators’ pay and improve programs preparing students for careers and college.
The law is also being challenged in federal court by trade groups representing internet and telecommunications companies and the U.S. Chamber of Commerce. A spokesperson for Maryland Attorney General Brian Frosh, whose office is defending the tax in both state and federal cases, said his office would review the decision and determine its next steps.
