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12.34
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Impact LevelMedium
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Scope LevelNational
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Last Update2025-09-18
Key Impacts
Positive Impacts (5)
Negative Impacts (1)
Event Overview
The court decision highlights the tension between state taxation policies and constitutional free speech rights, emphasizing the challenges of regulating large tech companies. The ruling underscores the complexity of digital economy governance and the potential for legal disputes over tax implementation.
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U.S. Appeals Court Strikes Down Part of Maryland's Digital Ad Tax
A federal appeals court ruled that a provision in Maryland's 2021 digital ad tax, which prohibits tech companies from passing the tax on to consumers, is an unconstitutional restriction on free speech. The law, the first of its kind in the U.S., imposes taxes on large tech companies for digital ads sold within the state. A U.S. Circuit Judge compared the ban to colonial-era protests against the Stamp Act, stating that it was intended to avoid public criticism of the tax. The ruling mandates that companies making money from internet advertising in Maryland must pay a tax without explicitly informing customers about how it impacts pricing. They cannot list the tax as a separate charge or fee. This decision overturns a 2024 ruling by U.S. District Judge Lydia Kay Griggsby, who had sided with a group of tech firms. The case has been returned to Judge Griggsby to find an appropriate remedy for the plaintiffs. Despite First Amendment concerns raised by business associations, the law was allowed to stand due to its many constitutional applications. The Computer & Communications Industry Association (CCIA) and other groups have challenged this 'passthrough prohibition' in federal court, arguing it violates free speech rights.