Digital Ad Tax Pass-Thru Ban Among Many Bills Passed in Md.

The Maryland General Assembly adjourned for the year on Monday night, concluding an unprecedented session that saw landmark bills in police reform, COVID-19 financial relief, sports gambling, and voting rights all pass. Among the many bills passed by the Assembly was SB 787, which forbids large tech companies impacted by the state’s new digital advertising tax from passing the state’s fee onto consumers.

The bill was passed by a large enough margin in both the House and Senate to override a possible veto from Gov. Larry Hogan, similar to how the legislature overrode the governor’s rejection of the original tax a couple of months ago. It remains unclear precisely how stringently the state could enforce the provision banning tech firms from passing the tax along to consumers, a point critics of the tax itself have argued.

The General Assembly also passed legislation allowing counties to implement graduated rates for their income taxes. Currently, every county (plus Baltimore city) levies their own income tax in addition to the state’s graduated income tax, but at a flat rate no higher than 3.2 percent. Under SB 133, the top rate would remain at 3.2 percent, but could be adjusted to exclude income at a lower rate.

Given that most of the state’s largest counties charge a 3.2 percent tax on all income, this would effectively lead to a tax cut or no change at all for a strong majority of the state’s taxpayers. The bill also codified a tax-rate floor of 2.25 percent, which is the flat rate that Worcester County currently levies.

Meanwhile, competing environmental bills ultimately failed, after House and Senate leaders failed to agree on a reconciliation between their competing bills. The more ambitious Senate bill aimed to reduce the state’s greenhouse emissions by 60 percent by 2030, while the House’s bill supported a 50-percent target; both bills featured higher goals than the current 40-percent reduction. Ultimately, time ran out on the proposals, both of which would have included a mandate to transition the state’s vehicle fleet to electric cars.

Early in the session, the Assembly approved the RELIEF Act, a $1.2 billion package that cut sales taxes for small businesses, increased the state’s Earned Income Tax Credit, and provided direct payments to some low-income residents and hard-hit businesses. For more information on the RELIEF Act, click here.

The General Assembly also passed a bill allowing Maryland voters to opt in to a permanent vote-by-mail list, ensuring they’d receive a ballot in the mail for all future state and local elections. The Assembly also set up a framework for legal sports betting, following a statewide ballot amendment that voters passed overwhelmingly last November.

Legislators also abolished mandatory life sentences without the possibility of parole for juveniles, overriding a veto by Gov. Hogan, and approved a statewide use-of-force protocol for police officers, including a requirement that all officers in the state be equipped with body cameras by 2025. The General Assembly also passed a significant funding increase for MARC and other MTA-managed public transit systems in the Baltimore area.

For more information on key legislation that passed in Annapolis this year, please view a helpful overview from The Associated Press.

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