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Chicago 'cloud tax' to add cost to Netflix, other streaming services
- jevinskie 11y agoDoes 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.
- spacehome 11y agoIt's a fantastic way to discourage Internet-based companies from installing a presence in Chicago.
- fatman 11y agoShhhhh... Don't broadcast your flouting of your state's Use Tax like that!
- jevinskie 11y agoI said I paid no sales tax. That is accurate and legal. I mentioned nothing about use tax! =)
- joezydeco 11y agoNetflix has (had?) a DVD processing/mailing center in Carol Stream, a suburb of Chicago. Amazon is eyeing warehouse/shipping space in Joliet.
- walsh-cloonagh 11y agoThey could have or want to have servers in Chicago. They need to cache content close to users, so the probably have hardware like OpenConnect [1] all over creation. [1] http://oc.nflxvideo.net/docs/OpenConnect-Deployment-Guide.pdf http://oc.nflxvideo.net/docs/OpenConnect-Deployment-Guide.pd...
- TheLoneWolfling 11y agoClose to != in
- briandear 11y agoDemocrats sure love their taxes. Meanwhile, there are dozens of shootings per week among the city's black community. Will any of that money to to solving that issue? Likely not. Meanwhile Houston is on track to become the U.S.'s third largest city, supplanting Chicago. I wonder why. Couldn't be taxes. Could it?
- logane 11y agoProbably not - heavily taxed cities controlled by democrats, like Boston, New York City, San Francisco, etc are the most successful in the US.
- imjustsaying 11y agoMost successful?
- sigzero 11y agoDetroit?
- paulhauggis 11y agoThey also make it difficult for anyone that isn't extremely wealthy to live there (the average apartment to rent in all of the cities you mention is $3000+) and the more restrictions and taxes for businesses make it so only huge companies can survive. I never understood why a community of business owners applauds more and more taxes and restrictions, which will further make it difficult for you to run an actual business. Edit: I know why. Because most people here don't run businesses or startups.
- tsotha 11y agoI'm not sure extra taxes and restrictions really make it harder to run most businesses. You just pass the extra cost on to your customers. That customer in Manhattan has enough money to pay $4000 each month for rent. He can afford to pay twice as much money for your service as people in rural areas.
- oldmanjay 11y agoWith 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 11y agoYes 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.
- apsec112 11y agoIf 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 11y agoThat just lets companies like Avalara sell a cloud based Ted solution
- saarons 11y agoI'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?
- ourmandave 11y agoFrom the article: Wynne said the additional fees, applied in a city already known for high taxes, could be enough to push individuals and companies over the edge. He said that since the taxes will be levied based on Chicago billing addresses, there’s nothing to stop individuals from moving outside city limits or listing billing addresses in other towns. The same is true for businesses. “Let’s say I sign up for streaming business data in the city but I have offices throughout the country,” Wynne said. “I will definitely make sure my billing goes through a different office.”
- stickfigure 11y agoThis doesn't answer the question. Who actually pays the taxes to the city? How does the city come after either the consumer or the provider, especially if the provider is in California/Europe/Russia/etc? I read the article and I don't understand how this works.
- maemilius 11y agoFrom the article: "But those companies could start collecting taxes sooner to avoid paying the taxes themselves." This is also how I understand other, similar taxes (like Sales Taxes) work. The business whose service/good would have incurred the tax is also responsible for paying the tax. You're liable for it, regardless of it you collect it from the consumer or not.
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- urda 11y agoI 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".
- outside1234 11y agoIts probably better for them to just put the tax in 45pt font on the order page. Its the people in these jurisdictions that are electing these folks.
- myNXTact 11y agoThat was my first thought. But on second thought, I wouldn't be surprised if big companies, like Netflix, don't have a problem with taxes. The billion dollar tech companies have the wherewithal to implement different tax regiments to each of their customers. It's the startups that this move will hurt and thus add entry barriers protecting the market share of the big boys.
- icanhackit 11y agoIt's the startups that this move will hurt I wonder - what if you took the code for Popcorn Time, made your own front-end and used the majority of your funds to sign deals with production companies? If it's P2P you could be based in Iceland for all it matters. You could avoid goods and services taxes everywhere because P2P is ephemeral and you'd avoid lawsuits from the rights holders for being a legitimate front-end for their content. Your attack surface would mainly be P2P blocking in countries that don't like the cut of your jib or throttling from ISPs.
- pjc50 11y agosign deals with production companies This is not going to happen.
- rayiner 11y agoHow 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.
- ourmandave 11y agoThey'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/NEWS02/140739943/emanuels-2015-budget-puts-off-pension-crisis-for-now http://www.chicagobusiness.com/article/20140801/NEWS02/14073...
- ben1040 11y agoAfter 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.
- beambot 11y agoNothing spurs local businesses and high-tech innovation like absurd taxes and regulation. Chicago just got nixed from my "potential non-SV startup locales" list.
- monochromatic 11y agoI wonder if this violates the Commerce Clause.
- zobzu 11y agoitd be interesting to have info on how such things can be voted (?) or established