Chicago’s ‘Netflix Tax’ reveals grim outlook on city finances

Chicago is in rough shape financially. They have been for some time. In fact, this is one of the most popular cities in the country, or world, yet they’re facing unprecedented financial issues. Just recently the city almost balked at making a payment to fund pensions of city employees. While that raised eyebrows, it didn’t at all raise as many as the recent legislation that passed through city hall. Chicago has introduced a ‘Netflix Tax’, or more specifically, a “streaming service tax,” which includes cloud services, streaming services, and well, anything else basically that the city feels it can make a few pennies from taxing.

The problem seems to be those pensions, which currently sit at a staggering $32 billion in unfunded debt the city of Chicago is on the hook for moving forward. Combine this with the other issues the city is facing financially, and it looks like Chicago could quickly turn into the next Detroit, sooner rather than later. The tax though, which will measure in at 9% will hit any cloud service that is either rendered, or accepted, so for small businesses it means that they could be toting the bill twice, instead of just once.


This comes at a time when Chicago is poised to really start making some moves in the tech industry. Many analysts have said that this runs counterproductive to the move that Chicago has been claiming to make. The city has said repeatedly that they want to be more favorable to tech companies, and to drum up more business in the tech business. However, taxing that business more definitely feels like it will hurt business, and some business owners have already taken to social media to let their customers know what the city is doing.

Justin Massa who runs Food Genius, pointed out that this meant things were going to be changing in the city of Chicago permanently. He said for anyone running a business that utilizes cloud services or offers them, business got 9% more expensive, and 9% more difficult to do. Many wonder where this will lead, and what good it will actually do. The city of Chicago believes that it will bring in an estimated $12 million extra per year. However, that remains to be seen, and even if they do make that type of money off the tax – will it be worth it in the end if businesses take their operations elsewhere?

These are questions that businesses, and individuals are asking. Even individuals feel slighted by this move, because it seems to raise a lot of questions about whether this tax is even fair on the surface. While Chicago clearly needs to do something to bring home some extra funding, this doesn’t seem like the smart way to go about it.