City of Chicago to Netflix subscribers: Bah, humbug!

Jeffrey Schwab

Jeffrey Schwab is a staff attorney with the Liberty Justice Center.

Jeffrey Schwab
December 24, 2015

City of Chicago to Netflix subscribers: Bah, humbug!

The Liberty Justice Center sued the city of Chicago in September to compel the city to stop collecting a 9 percent amusement tax on Internet-based streaming video, audio and gaming services.

Any Chicagoans settling down to watch “A Very Murray Christmas” or to binge- watch “Jessica Jones” on Netflix this holiday season must remember an unpleasant and costly truth: it costs 9 percent more to subscribe to Netflix in Chicago than what anyone else pays in the country. That’s because in June, an unelected city official issued a ruling that determined that Chicago’s old amusement tax ordinance – which until this year only applied to things such as concerts and sporting events that take place within the city – covers paid Internet-based streaming video, audio and gaming services.

The city is only imposing the tax on customers with Chicago billing addresses regardless of whether those customers ever actually use these Internet-based streaming media services in the city. That means that perhaps the hottest gift this holiday season for Chicago residents is a Netflix subscription billed to their non-Chicago friends and family.

Unable to wait for the ghosts of Christmas past, present and yet to come to convince the Scrooges at City Hall to drop the tax, the Liberty Justice Center filed a lawsuit on Sept. 9 to stop the city from collecting the amusement tax on Internet-based streaming media services.

The lawsuit, now before Judge Carl Anthony Walker in the Circuit Court of Cook County, challenges the tax on several grounds. First, the comptroller had no authority to extend the amusement tax to cover Internet-based streaming media services. In addition, the tax violates the federal Internet Tax Freedom Act and the state and federal constitutions. The lawsuit seeks to compel the city to stop collecting the amusement tax for Internet-based streaming media services.

Maybe with enough complaints from its residents, the city will realize its mistake and abandon its illegal and unconstitutional attempt to tax Internet-based streaming media services in 2016. After all, even the Grinch returned Christmas to Whoville after he heard the Whos singing.

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