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Chicago Adds Ridiculous 9% “Cloud Tax” on Netflix and Other Streaming Services

Streaming companies like Netflix, Spotify, and Amazon Prime are revolutionizing how Americans consume media content. These wildly popular services enable ubiquitous and virtually instantaneous access to expansive catalogues of music, movies, and TV shows.

Streaming is big business, and Chicago wants a piece of the action. On Sept. 1, the city’s controversial new “cloud tax” went into effect , extending a 9 percent “amusement tax” into the digital realm. Streaming the latest Taylor Swift album and binge-watching House of Cards is about to get a whole lot more expensive in the Windy City.

In addition to its amusement tax, Chicago is extending a different set of taxes for “nonpossesory computer leases” to cover cloud-based computer services like Amazon Web Services and the research database, LexisNexis.

Together, Chicago expects to net $12 million, funds the city says are critical to plug a widening budget gap and make up for tax revenues lost as Internet companies run brick-and-mortar shops out of business.

Why Some “Chicagoans” Aren’t Buying It

Some city residents, it seems, don’t buy it. In a lawsuit filed in the Circuit Court of Cook County on Sept. 9, six Chicago residents – all of them subscribers to at least one online streaming or video gaming service – are challenging the tax on streaming content. It is a brewing battle that could set a precedent for other cities eyeing Internet services as potentially boundless new sources of tax revenues.

The case hinges on two arguments. First, they assert that the Chicago comptroller exceeded his authority by reinterpreting the existing amusements tax to cover streaming media. And second, that Chicago’s taxation of Internet-based services violates the federal Internet Tax Freedom Act.

To the first contention, Chicago’s existing amusement tax levies a surcharge equal to nine percent of the cost of admission to “amusements” within city limits....

Source: The Daily Signal


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"Reality shows are responsible for almost sixty percent of all product placement on prime-time television." http://t.co/3itsanO0Vc #reality 09/18/15, @DannyGroner
@sgarg More quality British television! I wonder if they'll start pulling shows from Amazon Prime and Netflix. 09/18/15, @anigarg
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