What’s the Deal with Chicago’s ‘Netflix Tax’?

Photo courtesy of Metro Creative
Photo courtesy of Metro Creative

[dropcap]N[/dropcap]etflix users are going to get a little surprise when they go over their billing next September—a 9 percent tax that wasn’t there the month before.

In fact, it won’t be just Netflix users; anyone who uses a cloud-based service for entertainment will see this surprise. That means Hulu, Spotify, Xbox Live Gold, and other similar services are going to be taxed if the service is under a Chicago residential address.

The tax isn’t so much a “new tax” as much as it’s an extension of the city’s amusement tax, or as mayoral rep Elizabeth Langsdorth called it, a clarification of existing laws. The justification is that online entertainment is taking out a chunk of what would have normally been a healthy source of revenue for the city. This legal “clarification” is a way to reclaim it.

Though many of the tech companies aren’t particularly fond of this move (rumors are that lawsuits may arise), it’ll most likely just mildly annoy consumers.

Most of these services are so integrated to daily life now; it’s hard to imagine anyone canceling services over a 9-percent increase. For me, an extra 72 cents is a small price to pay to continue watching Daredevil pummel the ever-loving snot out of bad guys.

Overall, it might not be such a bad move for the city either. It’s estimated that the cloud tax will bring in about $12 million in revenue. Sure, it’s a drop in the bucket compared to the $1.1 billion deficit. But with both the state and city looking for any and every way to cut costs, every penny counts.

Besides, if you really don’t want to pay an extra $1.35 for your World of Warcraft account, you could just move to the suburbs.

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