Wes Moore's First Budget Depends On A Tax Recently Struck Down

"Although the revenue from the digital tax has not been made public, it has been reported that Maryland collected approximately $93 million in 2022 and $82.5 million in 2023,"

"All of the revenue is earmarked for the state's education system."

"When Maryland lawmakers celebrated overriding Gov. Larry Hogan's veto in February 2021 to enact the nation's first digital advertising tax, they envisioned a groundbreaking revenue stream that would generate up to $250 million annually for education reforms,"

"Four years later, 'that pioneering spirit has turned into a cautionary tale of unintended consequences, endless litigation and a tax that may ultimately cost the state far more than it ever collected,' says accounting lecturer Samuel Handwerger, upon a federal appeals court ruling the tax as unconstitutional because it blocks big tech from telling customers about the tax."

Maryland enacted a digital advertising tax in 2021 after lawmakers overrode Governor Larry Hogan's veto. The state's current budget projects $83 million from the tax for the coming year, and reported collections were about $93 million in 2022 and $82.5 million in 2023. All revenue is earmarked for education. On August 15, the U.S. Fourth Circuit partially struck down the tax, ruling it violated the First Amendment by preventing major technology companies from informing customers about the tax. The ruling could create an $83 million shortfall in the governor's first budget and has produced ongoing litigation and policy debate.

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