Apple & other tech giants appeal Maryland's digital advertising tax
A digital advertising tax law passed in Maryland in 2021 is coming under fire, with Apple and other tech companies appealing the law and demanding refunds on taxes already paid.
Maryland taxes digital ads
Maryland passed the first-of-its-kind tax on digital advertising in 2021. It was expected to bring in about $250 million per year to fund lofty education goals.
According to a report from The Baltimore Banner, Apple is leading the charge in opposing the tax. A hearing is set for November 17, and other companies like Google, Amazon, Meta, and Microsoft have filed appeals as well.
Apple argues in its court filings that the tax "singles out advertising services delivered over the internet for taxation while advertising services delivered through other means are expressly excluded from taxation altogether." The company also takes issue with how the taxes are determined to be paid.
Companies that earn at least $100 million per year globally are required to pay the advertising tax on all digital ads run within Maryland. These requirements and implementations allegedly violate multiple federal laws and constitutional protections.
Apple is appealing to have the tax struck down and a full refund be issued. Maryland has reportedly collected $32 million from the tax in 2023 so far.
Americans for Digital Opportunity, which represents the interests of the advertising industry, isn't a part of the case but its president Doug Mayer offered some commentary on the case.
"This suit is just one more proof point that Maryland has bitten off way more than it can chew with this short sighted and illegal tax," Mayer said. "Digital advertising is utilized by businesses of all sizes and that is exactly who is paying for this now: Maryland businesses both small and large. Someday soon this tax will be ruled unconstitutional, and the state will be forced to pay back every penny it took -- hope they haven't started spending it."
Comptroller Brooke Lierman has filed a motion to dismiss Apple's case that will be considered by a Maryland Tax Court judge. The comptroller asserts that Apple didn't properly apply for a refund and isn't due one.
The case will be heard Friday, November 17.
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Comments
Every paid ebook has sales tax on it.
Also on games from the app store.
The ebook tax is just wrong.
The Constitution limits regulation of interstate commerce to the Feds. Permitting the states to impose taxes on goods sold inside the state, even if the buyer is outside, falls under the heading of "regulation."
The fact that some things that are essentially the same are omitted reveals this for what it really is though. "We want some of that money we couldn't ordinarily get."
1.) Taxes reduce consumption of whatever they're applied to (this is why cigarette taxes are high - they're equal parts anti-smoking measure and revenue generator). An ad is a nearly unique product of generally negative value to the consumer (the consumer would prefer to have FEWER of them). Special cases like Super Bowl commercials which are funny enough that consumers seek them out notwithstanding, no recipient will pay for ads, and many people will pay to get rid of them. Netflix WITHOUT ads costs more than Netflix WITH ads, ad-blockers cost money, websites offer paid subscriptions to get rid of ads. Maryland has made the brilliant decision to tax something PEOPLE DESPISE.
2.) The tax falls on big companies that can easily afford it, and they don't have an easy way to pass it on. They can't charge end users more for ads, because end users don't pay for ads, they sometimes pay to avoid them. Any tax that sticks to big companies is useful - if you add a tax to most products, even if the producer is responsible for the tax, they pass it on (if you charge a value-added tax that manufacturers have to pay, they add it to the price of the product, passing it to consumers). The best way to keep a tax applied to the intended target is to target a product that makes passing the tax on nearly impossible - and taxing a product with a negative value is the best possible way to do that.