Declare the pennies on your eyes.
Netflix subscribers in Chicago were notified recently that the city was planning on adding a 9% “streaming tax” under some existing laws about entertainment taxes and whatnot. The tax is apparently going to raise $12M in revenue for the city.
This has obviously caused a bit of a stir, so subscribers to a variety of streaming services have sued the city citing that the tax is illegal. Chicago has of course argued in favor of the tax and will be fighting the suit in court. The suit claims that streaming taxes come in at a higher rate relative to other similar “amusement” taxes seen locally.
It’s an incredibly complex issue, as for a local tax to be legal, there are certain precedents set about what exactly defines a local tax. We fully expect to see similar taxes increased as cities continue to see local sales tax decline as more consumers turn to digital services for purchases.
The ruling in Chicago will certainly set the tone for these types of taxes nationally, likely determining, at least in the short term, how other cities plan on proceeding with this potential new revenue stream.
You can read the full Chicago Tax Complaint here (h/t Fortune)