Document Type

Amicus Brief

Publication Date


Case Name

Comptroller of Maryland v. Comcast et al.


Professors Reuven S. Avi-Yonah, David Gamage, Orly Mazur, Young Ran (Christine) Kim, and Darien Shanske (collectively, “Tax Law Professors”) write this amici curiae brief in support of the Appellant in COMPTROLLER OF MARYLAND v. COMCAST — the Maryland Digital Advertising Case.

Many digital transactions currently evade sales taxation in Maryland, even though the closest non-digital analogues are subject to tax. Specifically, digital advertising platforms like Respondents obtain vast quantities of individualized data from and on Marylanders in currently untaxed transactions. The scope and value of these transactions is vast and growing, as they allow advertising platforms the lucrative opportunity to sell advertisers precisely targeted, individualized, and verifiable digital access to Maryland residents. Maryland is the furthest along of at least ten states that have in recent years sought to address the substantial problem that much of the modern digital economy is untaxed as compared to traditional commerce, through taxing a proxy for the gap in consumption and building on work by economists seeking to reconcile our tax systems with digital advancements.

Amici here address Respondents’ substantive claims under the Internet Tax Freedom Act (ITFA) and the dormant Commerce Clause. The Circuit Court decision from the bench was cursory, but its essence was that Maryland’s tax discriminates against electronic commerce in violation of the ITFA and against out-of-state businesses in violation of the dormant Commerce Clause. Both holdings were mistaken. As for alleged discrimination against electronic commerce, digital advertising has no meaningful parallel in the non-digital world. It is used differently, has a significantly different impact, and relies on a business model and fee structure that is deeply and fundamentally different from traditional advertising, the most comparable non-digital industry. It is thus not “similar” to any non-digital service for purposes of discrimination under the ITFA. Further, rather than seek to confer an advantage upon non-digital advertising at the expense of a digital counterpart, the state’s policy simply seeks to impose a consumption tax on currently untaxed transactions, unlike those transactions that take place in non-digital markets. As for the dormant Commerce Clause, Maryland’s tax passes muster because it applies only to revenue derived from digital advertising in Maryland. While the tax rate varies depending on a platform’s worldwide gross receipts, that is a reasonable tax practice comparable to progressive income taxes that similarly consider out-of-state income and have been held to be constitutional.