Maryland's digital advertising tax was deemed unconstitutional by a federal appeals court for infringing upon free speech rights. The law targeted big tech companies like Meta, Google, and Amazon, requiring them to pay the tax without informing customers of its impact on pricing. The appeals court's ruling highlighted the importance of open discourse about taxes in a democracy, stating that states cannot silence affected parties to avoid criticism. This ruling could influence other states contemplating similar taxes on online advertising, and it is seen as a victory by trade associations opposing the tax.
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.
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 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.
A state cannot duck criticism by silencing those affected by its tax.' 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.
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