The City of Chicago has found a new way to nickel and dime its residents, this time taxing business owners who use satellite television.
The city issued a notice in November that it was expanding its 9 percent amusement tax to include businesses subscribing to paid programming – a creative way to skirt federal law prohibiting taxing satellite providers the same as cable providers, the latter of which the city already taxes. By directly taxing businesses – such as restaurants or bars who often subscribe to satellite TV for sports packages – the tax is applied directly on the consumer rather than the satellite provider. With this, businesses could be paying more than $400 in new taxes every year.
Sam Toia, president of the Illinois Restaurant Association, has already called the policy “crazy,” telling Crain’s Chicago Business that it will likely kill smaller businesses.
The city’s expansion of the amusement tax comes despite already facing a lawsuit for expanding it in 2015 to internet streaming services such as Netflix, Spotify and Xbox live. A Cook County Circuit judge allowed the lawsuit, which the Liberty Justice Center filed on behalf of customers, to proceed July 22. That lawsuit argued that the expansion of the tax is unconstitutional and illegal under state and federal law. The City of Chicago requested to dismiss it, which the judge denied.
Even while facing lawsuit, creative ways to dig into taxpayers’ wallets are nothing new for Chicago City Council, especially under Mayor Rahm Emanuel.
Emanuel struck a much more taxpayer-friendly chord before taking office, saying during his 2011 election night speech, “We need to confront the budget deficit that threatens our future, not by burdening Chicago families with more taxes they cannot afford, but by reinventing city government so city government works for the taxpayers.”
But under Emanuel, the average family is paying $1,700 more per year in taxes now than before he took office. This includes new taxes on garbage collection and plastic bags, a 29.5 percent tax increase on water and sewer service, and a record property tax hike totaling more than $500 million, among other taxes and fees. The mayor’s 2017 budget alone, which aldermen rubber-stamped 48-0 after skipping budget hearings, adds several new taxes and fees instead of making real, structural reforms.
Chicagoans are the most taxed residents in the state, as they pay more than 30 taxes and fees in total, including the highest sales tax in the nation. Despite old political promises not to overburden Chicagoans with new taxes, the mayor and City Council insist on putting the responsibility on taxpayers to fix politicians’ financial mismanagement. With a friendlier tax climate in neighboring states – or, perhaps, even in other parts of Illinois – nearly 3,000 people left Chicago from July 2014-July 2015, the largest population drop in the country among cities with populations over 50,000.
This new 9 percent tax on satellite TV is just the latest unnecessary burden Chicago politicians are creating to cover up their own mistakes. Taken together, the city’s high taxes and financial mismanagement make it uncompetitive and unfriendly for its residents. Five years and $1,700 ago, Emanuel agreed.