MD Digital Ad Tax Struck Down

The nation’s first tax on digital advertising was struck down as unconstitutional by a Maryland judge on Oct. 17.

Judge Alison Asti of Anne Arundel County Circuit Court said in a ruling that the Maryland law violates the Constitution’s prohibition on state interference with interstate commerce, as well as the federal Internet Tax Freedom Act, which prohibits discrimination against electronic commerce.

The law has been opposed by Verizon and Comcast since its introduction last year. A separate federal lawsuit filed by the U.S. Chamber of Commerce and associations representing online companies and advertisers is pending.

The state had estimated the tax on digital advertising could raise $250 million a year to help pay for a sweeping education reform measure. The Maryland law’s fate in the courts is being closely watched by other states considering a similar tax for online advertising.