A federal appeals court ruled Maryland's law prohibiting companies from disclosing reasons for price increases due to a digital advertising tax unconstitutional. The law targeted businesses with over $1 million in digital ad revenue, aiming to raise $250 million annually through a sliding scale tax on global revenue. The appeals court found the enforced silence on the tax provision violated First Amendment rights, preventing companies from transparently communicating cost increases to consumers, effectively insulating lawmakers from accountability. The court emphasized that the law misallocated economic responsibility.
The pass-through prevents companies from describing the tax in the one setting where the consumer is guaranteed to look: the invoice. Keeping out of hot water with voters is not among the interests that can justify this restriction.
The Maryland law taxed companies generating at least $1 million of gross revenue from digital ad services in the state, imposing levies on a sliding scale based on global revenue.
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