MD Governor Hogan Vetoes Digital Ad Tax

On May 7, Maryland Governor Larry Hogan vetoed the first-of-its-kind state digital advertising tax passed by the General Assembly on March 18. House Bill (H.B.) 732 was part of a package ushered through during the last days of a coronavirus-shortened legislative session in order to implement and fund costly education reforms recommended by the so-called Kirwan Commission. In doing so, Governor Hogan declared that:

These misguided bills would raise taxes and fees on Marylanders at a time when many are already out of work and financially struggling. With our state in the midst of a global pandemic and economic crash, and just beginning on our road to recovery, it would be unconscionable to raise taxes and fees now. To do so would further add to the very heavy burden that our citizens are already facing.

 The Free State Foundation could not agree more.

In a March 13 blog post and March 30 op-ed in The Baltimore Sun, FSF President Randolph May and I explained why H.B. 732 would be bad policy under the best of circumstances. More recently, in an April 30 Perspectives, I argued that H.B. 732 (as well as similar bills that have been introduced in New York) would undermine the central role that online commerce can play as we endure, and recover from, the economic impact of COVID-19.

H.B. 732 at passage enjoyed sufficient support to override Governor Hogan's action yesterday, but much has changed since. The General Assembly should acknowledge the radically altered economic reality that exists today and allow this veto to stand.