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Chicago Is Now Taxing Your Netflix, Other Streaming Services

By Rachel Cromidas in News on Jul 1, 2015 8:05PM

If you're thinking of escaping your sorrows over the city and state's colossal budget problems with Netflix this weekend, think again.

Chicago's Department of Finance quietly updated its amusement tax Wednesday to add a 9 percent tax on Chicago residents' streaming service subscriptions. That includes video streaming site Netflix and the paid version of Spotify. The city also changed its personal property lease transaction tax, so that it can now levy a 9 percent tax on uses of certain "cloud" services, such as legal research databases and real estate listings.

Attorneys with the local firm Reed Smith were among the first to point out these new "cloud taxes," according to The Verge. The firm described the tax rulings as "staggering in their breadth," because they include streaming services for music, movies, games and satellite TV.

Chicago is already well known for its tough tax rules and high taxes, and that's probably not a good thing, they say:

The city of Chicago is facing monumental fiscal pressures. As these two rulings demonstrate, bad times make for bad tax administration. With these two rulings, the Department has expanded the scope of its tax ordinances to their absolute limit, if not further. If any state or local governments were wondering how to tax transactions occurring in the Cloud when legislative authority for such taxation is absent, the Department has just sketched a roadmap.

Netflix reps told the Verge they already have plans to add the tax to the monthly charge for Chicago customers.

"Jurisdictions around the world, including the US, are trying to figure out ways to tax online services," said a Netflix representative, reached by The Verge. "This is one approach."