A federal appeals court ruled that Maryland's digital advertising tax, aimed at large companies like Meta, Google, and Amazon, is unconstitutional. The law not only mandates the tax but also prohibits companies from informing customers about its impact on pricing, infringing on their free speech rights. This decision emphasizes the significance of transparent discourse in a democratic society and challenges Maryland's intent to shield itself from criticism. The tax was projected to generate around $250 million for education funding, which now faces legal uncertainties as the case returns to district court.
A state cannot duck criticism by silencing those affected by its tax, said Judge Julius Richardson, referencing the importance of discourse in a democratic society.
The tax on digital advertising violates the Constitution by preventing companies from informing customers about its impact on pricing, thus infringing on their right to free speech.
Maryland's tax on digital ads aimed to raise about $250 million annually to fund K-12 education but was challenged for targeting large advertising firms unfairly.
Trade groups argue that Maryland attempted to censor criticism of its tax structure, attempting to shield lawmakers from political accountability by forbidding companies from transparency.
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