A Maryland tax court struck down the state's digital advertising tax for violating federal law. This ruling cools similar tax plans in Michigan backed by Governor Gretchen Whitmer. It shows states face legal barriers when targeting online ads.
The Maryland Tax Court recently ruled against the nation's first digital advertising tax. The court found that the tax broke the federal Internet Tax Freedom Act. This law prevents states from imposing special taxes on internet services that do not apply to other forms of commerce. The decision stops Maryland from collecting millions from large tech firms that run online ads.
Governor Gretchen Whitmer has pushed a similar tax idea in Michigan. She wants to raise money from digital advertising to fund state programs. But the Maryland outcome suggests her plan could face the same legal challenge. Lawmakers in Michigan may now think twice before moving forward with the proposal.
States should learn important lessons from this case. New taxes aimed only at digital platforms often run into federal rules. Policymakers need to seek revenue sources that treat all businesses fairly and avoid court fights. This approach can lead to more stable and legal ways to support public services.
Original Author: Jared Walczak | Source: FEE
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