Tech lobbyists sue Maryland tax cancellation

Tech lobbyists sue Maryland tax cancellation

On Thursday, a group of tech industry trade associations sued Maryland over a recently imposed tax on digital advertising targeted at residents of the state.

News: Last week, the Maryland legislature voted to overturn a veto by Republican Gov. Larry Hogan on the nation's first digital tax law, which seeks to raise funds for educational initiatives in the state by taxing digital advertising from the state. the largest companies.

What's happening:

The US Chamber of Commerce, the Internet Association, NetChoice, the Computer and Communications Industry Association and TechNet have joined the complaint filed with the US District Court for the Northern District of Maryland.

  • Their lawsuit alleges that the Maryland tax violates the federal Internet Tax Freedom Act, as well as the Constitutional Due Process Clause,  burdening and punishing conduct committed solely out of state. 

Maryland Tax Critics

it is said to be unfair, discriminatory, damaging to the economy during a pandemic, and unconstitutional. Maryland estimates the law will bring the state about $ 250 million a year.

  • As Axios reported last week, states are moving forward with their own technology policy laws while the federal government is holding back. The legislation is reminiscent of similar attempts to tax large American tech companies in Europe.

Between the lines:

Most of the groups supporting the lawsuit receive extensive funding from the tech industry and usually fight these battles on behalf of the larger industry. The groups also hope the lawsuit will dissuade other states from considering such measures.

What they're saying:

The premise of the law is deeply flawed ... [] The law will increase costs for consumers and make it harder for businesses to connect with potential customers,the lawsuit says.

  • While the law targets certain large companies, mostly out of state, it will ultimately be bad for Maryland businesses of all sizes, said Linda Moore, president and CEO of TechNet. Instead of wasting scarce resources defending discriminatory charges, the state should repeal the law and focus on policies that support many businesses already suffering from the COVID-19 pandemic.