Latest news with #digitaladvertisingtax
Yahoo
a day ago
- Business
- Yahoo
Maryland's first-in-the-nation tax on digital ads violated Big Tech's free speech, judges say
ANNAPOLIS, Md. (AP) — Maryland's first-in-the-nation tax on digital advertising violated the Constitution, a federal appeals court says, because blocking Big Tech from telling customers about the tax violates the companies' right to free speech. Supporters say Maryland needed to overhaul its tax methods in response to significant changes in how businesses advertise. The tax focuses on large companies that make money advertising on the internet such as Meta, Google and Amazon, who say they're being unfairly targeted. The ongoing legal fight is being watched by other states that are considering taxes for online ads. Maryland estimated the tax could raise about $250 million a year to help pay for a sweeping K-12 education measure. Maryland's law says the companies must not only pay the tax, but avoid telling customers how it affects pricing, with no line items, surcharges or fees, said the appeals court Friday in siding with trade associations fighting the tax. Judge Julius Richardson cited the Colonial-era Stamp Act, which helped spark the Revolutionary War, and wrote that 'criticizing the government — for taxes or anything else — is important discourse in a democratic society.' The plaintiffs contended Maryland lawmakers were trying to insulate themselves from criticism and political accountability by forbidding companies from explaining the tax to their customers. 'A state cannot duck criticism by silencing those affected by its tax,' the judge wrote. The unanimous ruling by the 4th U.S. Circuit Court of Appeals reverses a decision by U.S. District Judge Lydia Kay Griggsby and sends the case back to her with instructions to consider an appropriate remedy in light of the panel's decision. Trade groups praised the decision. 'Maryland tried to prevent criticism of its tax scheme, and the Fourth Circuit recognized that tactic for what it was: censorship,' said Paul Taske, co-director of the NetChoice Litigation Center, said in a statement. The law imposes a tax based on global annual gross revenues for companies that make more than $100 million globally. Under the law, the tax rate is 2.5% for businesses making 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. The law has been challenged in multiple legal venues, including Maryland Tax Court, where the case is ongoing. The Maryland General Assembly, which is controlled by Democrats, overrode a veto of the legislation in 2021 by then-Gov. Larry Hogan, a Republican. Brian Witte, The Associated Press
Reuters
4 days ago
- Business
- Reuters
Part of Maryland digital ad tax law declared unconstitutional
Aug 15 (Reuters) - A federal appeals court on Friday declared unconstitutional a Maryland law prohibiting companies that pass on the costs of the state's first-of-its-kind digital advertising tax from telling customers why prices went up. Reversing a lower court ruling, the 4th U.S. Circuit Court of Appeals unanimously agreed with the Chamber of Commerce and two other trade groups that the restriction violated members' First Amendment free speech rights, while insulating Maryland lawmakers from criticism and political accountability. The offices of Maryland's Attorney General Anthony Brown and the only defendant, state Comptroller Brooke Lierman, did not immediately respond to requests for comment. Aimed at larger businesses such as (AMZN.O), opens new tab, Meta Platforms' (META.O), opens new tab Facebook and Alphabet's (GOOGL.O), opens new tab Google, Maryland's 2021 law taxed companies that generated at least $1 million of gross revenue from digital ad services in the state. Maryland imposed levies on a sliding scale based on companies' global revenue, and lawmakers said the tax could raise $250 million annually. The Chamber of Commerce, NetChoice and the Computer & Communications Industry Association sued, calling the law a punitive assault on digital rather than print advertising. Friday's decision concerned their objection to a provision against passing on the cost of the tax "by means of a separate fee, surcharge, or line-item," saying it effectively forbade businesses from shifting blame to lawmakers. Circuit Judge Julius Richardson wrote for a three-judge panel, however, that the provision ensured that companies would bear economic and legal responsibility for the tax. He said Maryland didn't justify this, and the provision was facially unconstitutional. "The pass-through prevents companies from describing the tax in the one setting where the consumer is guaranteed to look: the invoice," the judge wrote. "Keeping out of hot water with voters is not among the interests that can justify a speech ban." Richardson added: "As much today as 250 years ago, criticizing the government - for taxes or anything else - is important discourse in a democratic society. The First Amendment forbids Maryland to suppress it." The Richmond, Virginia appeals court returned the case to U.S. District Judge Lydia Kay Griggsby in Greenbelt, Maryland, to determine appropriate remedies. In separate statements, the trade groups welcomed the decision. "The Fourth Circuit was absolutely correct," said Paul Taske, co-director of the NetChoice Litigation Center. "Maryland tried to prevent criticism of its tax scheme, and the Fourth Circuit recognized that tactic for what it was: censorship." The case is Chamber of Commerce et al v. Lierman, 4th U.S. Circuit Court of Appeals, No. 24-1727.
