Annapolis, MD –  Tax law scholars with particular expertise in state, local, and digital services taxes — Professors Reuven S. Avi-Yonah, David Gamage, Orly Mazur, Young Ran (Christine) Kim, and Darien Shanske — submitted a friend-of-the-court brief urging the Supreme Court of Maryland to uphold the state’s digital advertising tax, which was passed by the Maryland legislature in 2021 by an overwhelming majority. The revenue from Maryland’s digital advertising tax will help fund public education in the state. Democracy Forward and Janet, Janet & Suggs, LLC represented the scholars on the brief. 

The tax law experts’ brief urges the Maryland Supreme Court to overturn the Circuit Court’s ruling against the tax law in Comptroller of Maryland v. Comcast of California/Maryland/Pennsylvania/Virginia/West Virginia. The lower court held that digital advertising is “similar” to traditional advertising and that Maryland’s digital advertising tax is discriminatory under a federal law known as the Internet Tax Freedom Act (ITFA). The tax law scholars’ brief explains that digital advertising is deeply and fundamentally different from non-digital advertising — it is used differently, has a significantly different impact, and relies on a business model unknown in the non-digital context. The brief explains that Maryland’s digital advertising tax, as required by the ITFA, does not seek to confer a competitive advantage on physical retailers at the expense of companies like Comcast and Google. Instead, it merely updates existing tax schemes to require that the largest digital advertising platforms pay taxes on values they extract from Marylanders by collecting their data and using that data to sell individualized access to Marylanders. The state’s digital advertising tax is not discriminatory under the ITFA and is legal. The scholars’ brief urges that the Circuit Court’s decision be reversed. 

Maryland is one of a number of states that have considered or are considering adopting digital advertising taxes to ensure that companies operating in those states pay their fair share in taxes to help fund essential services. In Maryland, funds from the tax would support the state’s public education system, which is responsible for the education of nearly one million K-12 students in the state.  

“Tax law experts continue to believe that Maryland has authority to require businesses operating in the state to pay their fair share in taxes,” said Samara Spence, Senior Counsel for Democracy Forward. “The bipartisan Internet Tax Freedom Act was never intended to permanently shield digital companies from paying state taxes. We look forward to the Supreme Court of Maryland reviewing the case.”

Legal and tax experts are available for interview.