'Slipping Behind' on Privacy Enforcement, Md. AG Backs Data Broker Tax
Attorney General Anthony Brown (D) would lack the resources to enforce Maryland privacy laws without a proposed tax on data brokers that would fund a dedicated privacy team in his office, he said during a state House Economic Matters Committee hearing Tuesday. During a livestreamed session, the panel heard testimony on HB-1089, which would require that data brokers register with the state and, starting in the 2027 tax year, pay a 6% tax on gross income.
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Revenue from the proposed tax would fund the privacy unit, AI projects and Maryland public TV to provide digital literacy education to students in grades K-12. In addition, the bill would establish a privacy enforcement unit within the attorney general office’s consumer protection division. The unit would enforce the state’s comprehensive privacy law and the Maryland Age-Appropriate Design Code Act, plus any other state or federal laws involving technology, online services, privacy, AI and cybersecurity.
Del. Jared Solomon (D) sponsored HB-1089. Sen. Katie Hester and five other Democrats have an identical bill (SB-904) in the Senate.
"Maryland is slipping behind” on privacy enforcement because it lacks resources, Brown told the committee. His office has only one lawyer handling privacy issues, whereas other states, including Connecticut, Delaware and Oregon, have dedicated teams with several lawyers and staff members, he said. "Without dedicated professionals, attorneys, investigators and technologists with expertise in data privacy, artificial intelligence and high-tech enforcement, my office simply cannot effectively regulate this evolving industry or safeguard Maryland's personal information.” Brown added that he’s “often a fish out of water” because he lacks privacy expertise.
Maryland’s comprehensive privacy law, which contains data minimization rules that stand out from other states, takes effect this October. Maryland’s Age-Appropriate Design Code Act, requiring strong privacy settings for kids, took effect last October.
Brown said he asked Gov. Wes Moore (D) to include funding for a privacy unit in the FY 2026 budget, but the governor didn’t include it. “Without that funding, our robust privacy laws risk becoming ineffective.” Brown therefore supported the proposed tax, urging legislators “keep in mind” that data brokers earned $250 billion nationwide in 2022.
Responding to concerns from business groups and some committee members that the bill could wrap in businesses that aren’t truly data brokers, Solomon agreed that the bill's definitions need work. Committee Chair C. T. Wilson (D) also voiced openness to such tweaks. “The goal was to go after people who are selling our data,” he said. However, Republican delegates Steven Arentz and Mark Fisher still raised concerns that the bill might discourage businesses from coming to Maryland.
The committee chair also agreed with a suggestion by Caitriona Fitzgerald, deputy director for the Electronic Privacy Information Center (EPIC), to add a penalty for data brokers who fail to register. Fitzgerald additionally suggested adding a data deletion mechanism like the one California requires. EPIC strongly supports the bill’s registration requirement, she added.
The measure is so broadly written that it will cover “just about every single business in the world,” warned Maryland Retailers Alliance President Cailey Locklair. Megan Stokes, Computer & Communications Industry Association (CCIA) state policy director, agreed. "Right now, it's virtually impossible to sell products online without collecting personal data, such as names, shipping addresses or payment information.”
CCIA also is against the bill applying to non-Maryland businesses that sell to state residents, said Stokes. The proposed tax conflicts with the federal Internet Tax Freedom Act and the Constitution’s dormant commerce clause, she said. CCIA previously challenged a Maryland digital ad tax on similar grounds (see 2407050012). TechNet and the Maryland Chamber of Commerce also opposed HB-1089 Tuesday.
The Maryland comptroller's office estimates that “special fund revenues could increase by $90 million in the first full year that the data broker gross income tax is imposed and collected,” said a fiscal note on HB-1089. “By year four of full implementation, special fund revenues could increase by over $100 million.” However, the bill would require additional staff at comptroller and AG offices, increasing state expenditures significantly, the note said.