"If it moves, tax it," has been the unofficial motto of taxing authorities for generations, so no one was too surprised when Chicago decided to begin taxing Netflix and similar streaming services. But that doesn't mean they like it.
In fact, many local residents are outraged by the whopping nine percent "amusement tax" Chicago has applied to video services. They've filed suit against the city and comptroller Dan Widawsky for the action.
The lawsuit charges that Widawsky has "exceeded his authority" in implementing the tax because Chicago's municipal code does not "authorize the comptroller to impose new taxes that the city council has not authorized through a city ordinance," Courthouse News Service reported.
A mayoral mouthpiece earlier claimed the city was just trying to "ensure that city taxation is uniformly and fairly applied" but the lawsuit says the tax is anything but fair.
It notes that the nine percent tax is applied only to streaming rentals, not to online sales of DVDs of the same programs. It also notes that the city charges only a five percent amusement tax in venues seating more than 750 people and no tax at all for smaller venues.
Few living rooms seat 750 people, so the plaintiffs say the tax is clearly discriminatory and unfair. Besides, they argue, the federal Internet Tax Freedom Act provides that a municipality cannot "impose multiple or discriminatory taxes on electronic commerce."