
Chicago 'cloud tax' to add cost to Netflix, other streaming services - brock_r
http://www.chicagotribune.com/bluesky/originals/ct-chicago-cloud-tax-bsi-20150701-story.html
======
urda
I wish Netflix would man up when these kinds of extortions show up.

Just imagine telling "Fine, we're out. Enjoy telling your city why they can no
longer have Netflix".

~~~
rayiner
How is this "extortion"? You pay sales tax when you buy a DVD or go to a
movie, why should Netflix be tax free? I mean you can have a philosophical
opposition to consumption taxes, but that's different.

~~~
urda
> city’s amusement tax

How in the world is that not extortion? This is literally a cash grab by
Chicago.

~~~
tedunangst
Help us understand the difference. How is sales tax on DVDs not literally a
cash grab by Chicago?

~~~
leeleelee
Local businesses operating physically inside the city consume resources to
some extent. They use the roads, sidewalks, buildings, cause people to
walk/drive to certain places, etc. They pay for rent and other expenses, but
also use/benefit from city resources that they aren't directly charged for.

But netflix obviously doesn't have any physical presence in chicago.

~~~
pas
It doesn't matter. Chicago residents now subsidize Chicago services some other
way. (Via this Netflix tax.) End of (that) story.

Is it good that Chicago is subsidizing services by taxing some other activity,
mainly those that are not really utilizing those services, and taxing
residents that might not even use or benefit (directly) from those services?
Well, maybe not. But since it only provides a very small selection pressure
it's unlikely that residents will move out, or speak out.

------
saarons
I'm always curious how taxes like this are enforced, presumably the City of
Chicago can just sue companies like Netflix and Spotify if they think they're
not getting their share. If I have my own small-time video streaming business
does that mean I have to worry potentially about any municipality coming after
me for unpaid taxes? That could get a little nuts if there are thousands of
cities that could potentially have ordinances like this. How do I keep up? Am
I just not understanding the scope of this?

~~~
cjensen
IANAL... Within the US, you are only responsible for paying taxes in the
jurisdictions you reside in. It's pretty simple to cover those cases and
ignore the rest.

For example, a business with offices in California and Nevada must collect
sales tax when selling mail-order stuff to California and Nevada addresses,
but are not required to collect sales tax for selling mail-order stuff to the
other 48 states.

~~~
gamblor956
That's wrong.

You are responsible for paying taxes in any jurisdiction in which you have
sufficient nexus to justify taxation. For individuals, residence is the
generally accepted means for establishing residence, but some states also use
employment as a nexus (such as New Jersey). For businesses, nexus is much
broader, and generally includes any state in which the business is
incorporated or registered to do business, any state in which it has
facilities or employees, and (for sales and GST taxes) generally any state in
which a customer is located.

The Chicago tax would be most similar to a sales/GST tax. Under well-
established state and local tax principles Netflix, et al, could generally be
required to collect the Chicago tax on sales/services to Chicago customers.

~~~
tzs
> You are responsible for paying taxes in any jurisdiction in which you have
> sufficient nexus to justify taxation.

...

Yup.

> For businesses, nexus is much broader, and generally includes any state in
> which the business is incorporated or registered to do business,

Yup.

> any state in which it has facilities or employees,

Yup.

> and (for sales and GST taxes) generally any state in which a customer is
> located.

Nope. That may be a sufficient nexus to satisfy due process, but it is not a
sufficient nexus for the dormant commerce clause. See Quill Corp. v. North
Dakota, 504 U.S. 298 (1992).

It will become sufficient if Congress ever passes and the President signs the
Marketplace Fairness Act of 2015 or something similar, but that bill is a
_long_ way from that.

------
ourmandave
They're pretending Chicago's 2015 budget shortfall is $300 million instead of
$850 million because they're ignoring the $550 million they owe to police and
fireman pensions; putting that off until October.

The expected-to-raise $12 million "cloud tax" will cover 4% instead of 1.4%.
So that's good news...

[http://www.chicagobusiness.com/article/20140801/NEWS02/14073...](http://www.chicagobusiness.com/article/20140801/NEWS02/140739943/emanuels-2015-budget-
puts-off-pension-crisis-for-now)

~~~
ben1040
After selling parking meter collection rights, and trying to sell Midway,
surely they still have some other public infrastructure cash flows left they
can sell off and then squander the proceeds when the check clears.

------
jevinskie
Does Netflix even have a physical presence in Chicago? How would the city be
able to compel Netflix to pay otherwise? I'm thinking about how I paid no
sales tax for Amazon purchases until Amazon opened a warehouse in my state.

~~~
fatman
Shhhhh... Don't broadcast your flouting of your state's Use Tax like that!

~~~
jevinskie
I said I paid no sales tax. That is accurate and legal. I mentioned nothing
about use tax! =)

------
apsec112
If used widely, wouldn't this basically kill every software startup? A new
startup with, say, 10,000 users can't possibly afford to file hundreds of
pages of tax paperwork in each of 2,000 separate local jurisdictions.

~~~
bluedino
That just lets companies like Avalara sell a cloud based Ted solution

------
beambot
Nothing spurs local businesses and high-tech innovation like absurd taxes and
regulation.

Chicago just got nixed from my "potential non-SV startup locales" list.

------
oldmanjay
With Chicago's famous history as a bastion of innovation in corruption, this
doesn't really surprise me at all. Those pockets need filling, people, and who
better to squeeze for cash than those silly Internet businesses? They aren't
even real!

~~~
shit_parade3
Yes exactly, I can only presume the funds will go to building additional black
sites so they can torure and murder people.

The solution is not to pay, Chicago has no legitimate authority.

------
monochromatic
I wonder if this violates the Commerce Clause.

------
zobzu
itd be interesting to have info on how such things can be voted (?) or
established

