Authored by Matthew Vadum via The Epoch Times,
A state tax court in Maryland invalidated the nation's first state tax on digital advertising and directed state officials to refund tax payments already collected from major tech companies.
People pass a building on the Google headquarters campus in Mountain View, Calif., on July 23, 2025. Justin Sullivan/Getty ImagesThe legal dispute had been closely watched by other states that are considering taxing online advertisements.
The Annapolis-based Maryland Tax Court ruled on Aug. 14 that the digital advertising gross revenues tax was unconstitutional after it was challenged in three separate lawsuits by Google, Apple, and Peacock TV. Refunds are expected to run into the hundreds of millions of dollars.
The state imposes the levies based on the businesses' global revenue. Lawmakers previously said the tax could raise $250 million per year. The money raised from the tax was earmarked for a state education program.
The 2021 tax statute specifically targets the revenue large companies earn from digital advertisements shown in Maryland. Companies that take in more than $100 million in annual global gross revenue were taxed at 2.5 percent.
A sliding scale applies to companies with larger revenues, maxing out at 10 percent for those earning more than $15 billion in global gross annual revenues.
The law's backers argued that Maryland needed to overhaul its tax system to deal with major changes in how businesses advertise. Lawyers representing the affected companies said their clients were targeted unfairly.
The state court said the tax runs afoul of the federal Internet Tax Freedom Act, the First Amendment, and the due process and commerce clauses of the U.S. Constitution.
The court held that regulating interstate commerce was the business of Congress - not the Maryland General Assembly - and that it was inappropriate that the tax law was premised on global revenue rather than revenue that comes from in-state advertising.
The Internet Tax Freedom Act forbids taxation of electronic commerce if similar services are not taxed. The court held that there is no meaningful distinction between digital advertising and print or billboard ads, meaning the federal bar applies.
The Apple logo during the preview of the redesigned and reimagined Apple Fifth Avenue store in New York City on Sept. 19, 2019. Brendan McDermid/ReutersIn August 2025, a three-judge panel of the U.S. Court of Appeals for the Fourth Circuit unanimously struck down the disclosure ban in the Maryland law that prevents companies from listing the digital advertising tax on customers' receipts.
Forbidding the disclosure of the tax on customers' receipts means that if companies opt to pass on the cost of the tax to their customers, they are not allowed to advise customers why prices have risen, which means Maryland is insulated from political accountability, the appeals court's written opinion said.
The law "prevents companies from describing the tax in the one setting where the consumer is guaranteed to look: the invoice," the opinion said.
"Keeping out of hot water with voters is not among the interests that can justify a speech ban.
"Criticizing the government - for taxes or anything else - is important discourse in a democratic society. The First Amendment forbids Maryland to suppress it."
The Tax Foundation hailed the Maryland Tax Court's new ruling in an Aug. 14 blog post.
"This is a robust win for the petitioners on all counts," Jared Walczak, a senior fellow at the foundation, wrote.
Although Utah and Illinois enacted digital ad taxes this year, none followed Maryland's approach. Lawmakers in other states that are "considering a digital advertising tax should likewise take note of today's result. It's a look into their own future if they choose to adopt a similar tax," he said.
Democratic legislative leaders in Annapolis said the state will appeal the court ruling.
Senate President Bill Ferguson and House Speaker Joseline A. Peña-Melnyk said they "respectfully disagree with today's ruling and expect the legal process to continue."
The tax was enacted because the state's tax system needs to keep pace with a changing economy in which more commerce and advertising have been moving online, they said in an Aug. 14 statement posted on X.
"It was appropriate to modernize our tax code so that large digital advertising companies contributed alongside other businesses operating in our state."
The Associated Press contributed to this report.
Tyler Durden Tue, 08/18/2026 - 15:05Jefferies analyst Lloyd Byrne wrote in a note on Monday that surging refined-product margins, stronger gas-fired power demand, and improving earnings estimates are providing clear tailwinds for energy stocks, even as valuations and technicals appear stretched.
Byrne showed that the clearest source of strength in the energy market is refining. The six-month New York Harbor diesel-to-crude spread topped $100 (HOCL1 Index on Bloomberg) and has moved in close tandem with the Energy Select Sector SPDR Fund (XLE).
Included in the "10 Charts That Mattered" report that Byrne published for clients on Monday is chart No. 9, titled "Energy & Materials Among High-Quality, High Real Rate Favorites."
He makes the case that rising refined-product margins and a high-real-rate environment favor several energy and materials stocks. Materials do not benefit from refining margins, but rather from the higher rate environment.
On the energy side, he outlined how Valero is the top crack-spread play because it directly benefits from higher refining margins. He then pointed out that ConocoPhillips and EOG are upstream producers, which means they benefit mainly from higher crude oil and natural gas prices, not higher refining margins, while CF Industries, Avery Dennison, and Crown Holdings are materials stocks that benefit in a higher rate environment.
He posted a chart showing the 10-year Treasury inflation-protected yield at about 2.5%, placing real interest rates in the 79th percentile since 1997. In other words, inflation-adjusted borrowing costs are extraordinarily high.
Byrne sees energy and materials as attractive havens for investors in a high-real-rate regime, but only Valero has direct exposure to the diesel crack-spread blowout.
Diesel crack hits record $102. This is absolutely unprecedented.
Industrial economy either grinds to a halt or consumers about to be hit with the biggest energy pass through in history pic.twitter.com/OtAdgrCvb3
He then pointed to ETF flows, which only indicate that investors are favoring cyclicals.
Materials ETFs have received net inflows equal to 28.6% of assets year to date, followed by industrials at 16.7% and energy at 14.1%. Technology, on the other hand, stands at only 4.1%.
Conversely, investors have been dumping semiconductor stocks.
The key takeaway is that investors are rotating out of semiconductors and into cyclicals, particularly materials and energy. Energy's robust year-to-date inflows remain intact, with widening refining margins and positive earnings revisions, which may only suggest further rotations into cyclicals.
Professional subscribers can read more about crack spreads, the Gulf energy crisis, and US consumers here on our new Marketdesk.ai portal.
Tyler Durden Tue, 08/18/2026 - 14:45