The City of Chicago is planning to tax streaming services like Spotify, Netflix, and Xbox Live, but is that legal? According to the Liberty Justice Center, Chicago’s 9 percent ‘amusement tax’ on subscription-based services is an overstretch from an earlier law, and doesn’t specifically include audio- and video-specific services like Spotify and Netflix.
Chicago anticipates a $12 million windfall from the tax, which would also include subscription services like Amazon Prime, Hulu, and Apple Music. That’s real music to the ears of Chicago bureaucrats, though could be legal fireworks before that point: according to court filings from Liberty, Chicago is also violating the 1998 Internet Tax Freedom Act, which aimed to protect internet services from excessive taxation during its developmental stage (which of course, is over).
Other issues involve disparities between online and offline ‘amusement’. In its filing, Liberty questions why the City of Chicago isn’t also taxing offline Netflix transactions, or handing out exemptions to smaller live performances.
And who authorized this? On top of all that, there’s the issue of whether the tax was ‘snuck in,’ instead of being formally voted by the Chicago City Council.
The complete filings follows.