The enactment of the bill, by a 29-17 vote, marks the beginning of what could become a wave of similar legislation across the country, as policymakers increasingly target the economic dominance of large tech platforms, some of which have built massive financial engines through advertising technology.
It’s also another example of how proposals being introduced abroad to rein in Big Tech are increasingly gaining traction in the United States. But it could spark a court battle over the legality of the tax and its impact on digital businesses.
In a Facebook post Friday morning, Ferguson said the bill is targeted at companies that make more than $100 million a year selling digital advertising, a threshold that large technology companies like Facebook and Google would easily surpass. Facebook and Google generated $84 billion and $147 billion in digital advertising revenue last year, respectively.
Business and technology groups have also opposed the bill. After the Maryland House of Delegates voted to override Hogan’s veto earlier this week, the Internet Association — a trade group representing Amazon, Facebook, Google and others — said in a statement it would harm small businesses for whom digital advertising “is a critical lifeline” to attract new customers.
Maryland may soon be the vanguard for a wave of state taxes on digital platforms. States including Connecticut and Indiana have introduced similar legislation.
The growing push among states to tax tech giants also follows a push by foreign governments, including France, the UK and others, to impose new taxes on tech companies. The Trump administration had opposed those efforts, getting into a public spat with France over the issue last year.
The Maryland tax could face roadblocks, however. State Senator Stephen Hershey, speaking ahead of the vote, predicted “years of litigation” ahead for the law. Critics said the bill raises questions about the state’s power to tax digital commerce and whether it may conflict with federal law and the interstate commerce clause of the Constitution.
State Senator Jim Rosapepe (D), arguing for the digital ad tax, acknowledged that litigation is likely but said he had high confidence that the judicial system would resolve the questions appropriately. The bigger issue, he said, is how tech companies are “dodging taxes all over the world.”
“We can make sure that if Big Tech doesn’t pay its fair share in West Virginia, or doesn’t pay its fair share in India, at least Big Tech will pay its fair share in Maryland,” Rosapepe said.
