Maryland tax on digital ads violated Big Tech's free speech, judges say
[August 19, 2025] By
BRIAN WITTE
ANNAPOLIS, Md. (AP) — Maryland’s first-in-the-nation tax on digital
advertising violated the Constitution, a federal appeals court says,
because blocking Big Tech from telling customers about the tax violates
the companies’ right to free speech.
Supporters say Maryland needed to overhaul its tax methods in response
to significant changes in how businesses advertise. 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.
The ongoing legal fight is being watched by other states that are
considering taxes for online ads. Maryland estimated the tax could raise
about $250 million a year to help pay for a sweeping K-12 education
measure.
Maryland’s law says the companies must not only pay the tax, but avoid
telling customers how it affects pricing, with no line items, surcharges
or fees, said the appeals court Friday in siding with trade associations
fighting the tax.
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 plaintiffs contended Maryland lawmakers were trying to insulate
themselves from criticism and political accountability by forbidding
companies from explaining the tax to their customers.
“A state cannot duck criticism by silencing those affected by its tax,”
the judge wrote.
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.
Trade groups praised the decision.
[to top of second column] |
People talk near a Meta sign outside of the company's headquarters
in Menlo Park, Calif., March 7, 2023. (AP Photo/Jeff Chiu, File)
 “Maryland tried to prevent criticism
of its tax scheme, and the Fourth Circuit recognized that tactic for
what it was: censorship,” said Paul Taske, co-director of the
NetChoice Litigation Center, said in a statement.
Maryland Comptroller Brooke Lierman, who is the defendant in the
case, and the Maryland attorney general's office, who is
representing the state, declined to comment Monday.
The law has been challenged in multiple legal venues, including
Maryland Tax Court, where the case is ongoing.
The law imposes a tax based on global annual gross revenues for
companies that make more than $100 million globally.
Under the law, the tax rate is 2.5% for businesses making more than
$100 million in global gross annual revenue; 5% for companies making
$1 billion or more; 7.5% for companies making $5 billion or more and
10% for companies making $15 billion or more.
The Maryland General Assembly, which is controlled by Democrats,
overrode a veto of the legislation in 2021 by then-Gov. Larry Hogan,
a Republican.
All contents © copyright 2025 Associated Press. All rights reserved
 |
