Friday, July 17, 2015

Chicago's Cloud Tax Could Affect Your Music

Cloud Tax image
Most large cities claim to be in a money crunch these days and Chicago is no exception. In order to create a new income stream, the city has instituted a "cloud tax" that targets online databases and streaming entertainment services.

This means that you now may be taxed on your entertainment from Spotify, Apple Music, or Netflix at a rate of 9%. If you're currently paying $100 a year for a service, it will now cost you $109 if you live in Chicago.

But how can this happen, since none of those services are based in Chicago and for the most part are global entities? The cloud tax is actually comprised of two taxes - one covering "electronically delivered amusements" and the other covers remote computing databases and platforms that are aimed at those consuming the media, not providing or distributing it.

Some ISPs are already implementing collections of the tax, but that may also make them eventually leave the city limits to keep the bookkeeping costs down and their customers happier.

Many attorneys are gearing up for a fight as well, claiming that the tax violates both the Federal Communications Act and the Tax Freedom Act as it discriminates against services delivered on the Internet.

Of course, with people reluctant to pay for a subscription music service already, adding even a few dollars more could be a deal breaker.

Here's hoping that the cloud tax doesn't catch on beyond Chicago, since before you know it we'll all feel the pain as the local taxes pile up on our Internet use.

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