Big Tech and their lobbyists came out guns blazing to contest the constitutionality of Maryland’s first-in-the-nation Digital Ad Tax. The US Chamber of Commerce and the Internet Association were among those who filed suit against the Old Line State.
This tax would be levied against digital ad providers who make more than $100M a year in ad revenue nationwide, and could be up to 10% on the revenue that they generate on said ads running in Maryland. For context, Facebook and Google made roughly $2.5B in ad revenue in Maryland last year, which would’ve generated $250M in tax revenue. The obvious downside is that this tax imposed on the tech giants would undoubtedly be passed along to small businesses using the ad services who are already struggling.
The good news for Maryland small businesses is that this lawsuit will probably be tied up in courts for the foreseeable future.
Ladies and gentlemen, boys and girls, it’s your boy Jaron Rice, founder and CEO of Magothy Payments, Maryland’s highest-rated merchant services provider. I came back today to give you an update on the Maryland digital ad tax.
If you don’t know and you’ve been living under a rock or you don’t live in Maryland, the Maryland legislature passed a bill that would impose a tax on revenues that are generated for online ads here in Maryland when the company imposing them has more than I think it’s $100 million a year in ad revenue. So it targets big tech companies like Facebook and Google and places like that, and it would levy up to a 10% tax on the revenues generated for digital ad sales here in Maryland.
They were estimating that it would raise about $250 million in tax revenue which, of course, anybody with a functioning brain understands would be passed on to the small businesses who are actually using these services. So that was the bad news.
The good news as of right now is that companies are coming out of the woodwork to sue the state of Maryland because of this unconstitutional and asinine piece of legislation. Notably, the U.S. Chamber of Commerce and the Internet Association, they are obviously suing the state of Maryland because the law is unconstitutional. It’s predatory, and it specifically targets digital ads while ignoring print and television and other avenues like that.
So this legal battle could be in the works for a while, and so the good news is hopefully it gets overturned and is deemed to be unconstitutional so that small business owners like us don’t have to shoulder those costs.
Keep your fingers crossed. We’ll bring you any updates as they happen, and I hope you guys are having a wonderful day. I’ll catch you in the next one.