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It’s on. Subscribers to popular streaming services, including XBox Live and Spotify, have filed a lawsuit that claims the city of Chicago’s controversial tax policy on digital entertainment is illegal.
The challenge to the tax policy, filed last week in Cook County state court, is important because it could help define the power of cities and states to tax parts of the internet economy.
The controversy turns on Chicago’s recent decision to extend its existing 9% “Amusement” levy, which applies to events like shows and baseball games, to a wide range of online services.
In their court challenge, a group of Chicago residents claim the city comptroller’s decision to apply the Amusement tax to streaming service amounted to a new tax that could only have been imposed by a vote of city officials. They claim they are being harmed since the tax makes them pay more for Amazon Prime AMZN 0.34% , Netflix [URL='http://fortune.com/company/nflx/']NFLX -0.74% , Hulu, Xbox Live [URL='http://fortune.com/company/msft/']MSFT 1.88% and Spotify.[/URL][/URL]
[URL='http://fortune.com/company/nflx/'][URL='http://fortune.com/company/msft/']
[URL='http://fortune.com/2015/09/14/netflix-tax-lawsuit/']Read more here. (Fortune)[/URL][/URL][/URL]
The challenge to the tax policy, filed last week in Cook County state court, is important because it could help define the power of cities and states to tax parts of the internet economy.
The controversy turns on Chicago’s recent decision to extend its existing 9% “Amusement” levy, which applies to events like shows and baseball games, to a wide range of online services.
In their court challenge, a group of Chicago residents claim the city comptroller’s decision to apply the Amusement tax to streaming service amounted to a new tax that could only have been imposed by a vote of city officials. They claim they are being harmed since the tax makes them pay more for Amazon Prime AMZN 0.34% , Netflix [URL='http://fortune.com/company/nflx/']NFLX -0.74% , Hulu, Xbox Live [URL='http://fortune.com/company/msft/']MSFT 1.88% and Spotify.[/URL][/URL]
[URL='http://fortune.com/company/nflx/'][URL='http://fortune.com/company/msft/']
[URL='http://fortune.com/2015/09/14/netflix-tax-lawsuit/']Read more here. (Fortune)[/URL][/URL][/URL]