A Netflix tax is coming soon, as streaming services will have an additional surcharge. The idea is simple, treating the internet like a utility means certain things, especially access and cost, and taxing them is not one of those things. We can expect a serious challenge to go to court as it seems to be a clear violation of federal regulations prohibiting states from taxing the Internet.
This is a violation of the "Interstate Commerce" clause of the U.S. Constitution. Only the federal government has the power to regulate interstate commerce, including taxing it. Here's part of a conversation about how little sense the move makes:
Someone please correct me if I'm wrong, because I'm a bit confused.Let's say you buy your water from a water provider and it is no longer seen as a utility. You pick your provider, and how fast you want the water to get there. This is not taxed by the government.Yet now a city government wants to tax you on baths. Everytime you take a bath, there is tax on the water used. There is no tax on taking shower, only baths.That idea sounds completely insane. Yet how does it differ from this news story? There is so many things you can do with water/Internet, and you tax one specific thing? None of that makes sense.Furthermore, what's stopping you from simply using a VPN or driving a city down to set up your account and saying you live in that area? Is the tax charged only when you're in the city? What if you're away for a week, do you still owe that tax even though you used it outside the jurisdiction? And why Netflix and Hulu? Am I going to have to pay tax on my YouTube Red account or twitch Prime Memberships?
The pick and choose approach to the proposed legislation makes little sense and is prone to both abuse, and the empowerment of corporations (who will be collecting this new tax and are also pushing against net neutrality).
Chicago tried the same thing last year http://www.forbes.com/sites/travisbrown/2015/07/08/chicago-to-apply-9-netflix-tax/#1d75212f27a6