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Targeting Big Tech, Maryland becomes first state to tax digital advertising

February 12, 2021. Summarized by summa-bot.

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Maryland became the first state in the country on Friday to impose a tax on digital advertising, as the state's senate voted to override a gubernatorial veto of legislation that would impose up to a 10% levy on revenue from online ads shown in Maryland.

(CNN Business)Maryland became the first state in the country on Friday to impose a tax on digital advertising, as the state's senate voted to override a gubernatorial veto of legislation that would impose up to a 10% levy on revenue from online ads shown in Maryland.

The digital advertising provisions of Maryland's new tax law could raise an estimated $250 million in its first year, with revenues being earmarked for education.

In a Facebook post Friday morning, Ferguson said the bill is targeted at companies that make more than $100 million a year selling digital advertising, a threshold that large technology companies like Facebook and Google would easily surpass.

"This targeted tax on companies that make over $100,000,000 a year ONLY from digital advertising is a vital mechanism to make sure big tech pays taxes in Maryland, just like our small businesses," Ferguson wrote.

He vetoed it last year, saying it would "raise taxes and fees on Marylanders at a time when many are already out of work and financially struggling.

After the Maryland House of Delegates voted to override Hogan's veto earlier this week, the Internet Association -- a trade group representing Amazon, Facebook, Google and others -- said in a statement it would harm small businesses for whom digital advertising "is a critical lifeline" to attract new customers.

Maryland may soon be the vanguard for a wave of state taxes on digital platforms.

The growing push among states to tax tech giants also follows a push by foreign governments, including France, the UK and others, to impose new taxes on tech companies.

Critics said the bill raises questions about the state's power to tax digital commerce and whether it may conflict with federal law and the interstate commerce clause of the Constitution.

State Senator Jim Rosapepe (D), arguing for the digital ad tax, acknowledged that litigation is likely but said he had high confidence that the judicial system would resolve the questions appropriately.

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