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The Maryland State Capitol Building in Annapolis. Photo: Jim Watson/AFP via Getty Images

Maryland has become the first state in the U.S. to enact a tax on the revenue generated from digital advertisements.

Driving the news: The state's Senate on Friday joined the House of Delegates in voting to override Republican Gov. Larry Hogan's veto of a tax on the revenue that large tech companies generate from showing online ads to Maryland residents. Democrats control both chambers.

Why it matters: Money raised from the tax would help to bridge budget gaps, with most of the funds going public schools.

  • Analysts estimate the tax of up to 10% would generate as much as $250 million in the first year, per The New York Times.

Our thought bubble via Axios' Ashley Gold: We can expect imminent lawsuits from critics who have said the law is unworkable, discriminatory and unconstitutional.

  • “It is a shame that the Maryland General Assembly chose political theater over sound public policy with today’s veto override vote of HB 732,” said Robert Callahan, senior vice president of state government affairs at the Internet Association.
  • “At least Maryland businesses and consumers can rest easier knowing that the courts will have the last say on this matter, and that the law, not politics, will decide the outcome," he added in a statement.

The big picture: The law resembles similar taxes passed in the European Union.

  • Other states across the U.S. are pursuing similar measures.
  • The states are acting at a moment when, despite lots of talk in Washington about changing the ground rules for tech, federal lawmakers are preoccupied with impeachment and COVID-19 relief, Gold reported.

Go deeper: States leapfrog federal government in restraining tech

Go deeper

Feb 11, 2021 - Technology

States leapfrog federal government in restraining tech

Illustration: Aïda Amer/Axios

States across the U.S., unwilling to wait for the slower gears of the federal government to turn, are moving aggressively to regulate the tech industry.

Why it matters: States famously serve as "laboratories of democracy," testing out innovative laws that other states or the federal government can adopt. But their experiments can sometimes be half-baked or have unintended consequences, and their regulations can run afoul of the courts.

Linh Ta, author of Des Moines
Feb 12, 2021 - Axios Des Moines

Rep. Axne wants local governments prioritized on COVID-19 relief

Rep. Cindy Axne during an interview in Washington, D.C. in 2019. Photo: Melissa Lyttle/Bloomberg via Getty Images

The upcoming COVID-19 stimulus package is likely the last chance for Iowa's local governments to get federal relief, Rep. Cindy Axne (D) told Axios.

Why it matters: The state's cities and counties are losing millions in tax revenue and municipal fees, as everything from hotel bookings to park shelter rentals have dropped due to the pandemic.

Hope King, author of Closer
Updated 1 hour ago - Economy & Business

Peloton pumps its brakes

Data: FactSet; Chart: Axios Visuals

Peloton’s popularity is falling as swiftly as it shot up.

Why it matters: Not all pandemic habits stick around. Peloton's trajectory over the past two years exemplifies how challenging it's been for companies to gauge shifts in consumer demand — particularly in sectors heavily altered by the pandemic.