As soon as Maryland legislators proposed an advertising tax that targeted out-of-state digital businesses, they were warned that their tax scheme was almost certainly unconstitutional. They went ahead with the tax anyway, even overriding Governor Larry Hogan’s veto to do so. And now, just months after going into effect, a Maryland judge has done what legislators were warned would happen.
Even before the legal issues, there are plenty of reasons why Maryland’s digital advertising tax should never have made it through the legislative process. Maryland’s digital advertising is structured as a gross receipts tax, meaning that it would apply to all digital advertising revenue from Maryland sources, not just profits.
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