Chicago First City to Collect ‘Netflix Tax’ – Should Others Follow?

What’s the story?

• Chicago’s “Netflix tax” – a 9% levy imposed on online streaming services – has brought $2 million to the Windy City, and may pave the way for other cities and states to follow.

How is this legal?

• The U.S. Supreme Court ruled last summer in South Dakota vs. Wayfair that states could collect sales tax from online shoppers.

What are people saying?

• "Cities and states are beginning to experiment with this," Mark Mazur, director of the Urban-Brookings Tax Policy Center, told CBS News.

"People are buying more and more services and less goods, so the sales tax pace is getting reduced, and you end up trying to find ways to raise revenue from services.”

• The Liberty Justice Center - the group behind a current lawsuit on behalf of Netflix, Spotify, and Amazon customers - argues that the tax is illegal.
• “If you go to a concert in the city, it's at least in the city. You have to take public roads or transportation to get there, you may need police in the area, there's a lot of services you can tie directly to the city,” said Jeffrey Schwab, an attorney at the center. “That's not the case when you're streaming something on the internet.”
• FoxNews.com columnist Liz Peek argued that blue cities need to find these kinds of novel tax revenues because of overpaid unions.

“It really comes down to this sort of impossible economic problem that they created by paying municipal unions too much, making too many promises down the road,” Peek said.

What do you think?

Do you support a “Netflix Tax”? Take action and tell your reps, then share your thoughts below.

—Josh Herman

(Photo Credit: iStock / mphillips007)