46 California Cities Join Rush To Impose 'Netflix Tax'
from the tax-ALL-the-things dept
Last year, Chicago proudly declared that the city would be expanding its 9% amusement tax (traditionally covering book stores, music stores, ball games and other brick and mortar entertainment) to online streaming services and cloud computing. While Chicago was hungrily pursuing the $12 million in additional revenue the expanded tax would provide, it ultimately faced a lawsuit questioning the legality of Chicago's move. The ongoing lawsuit by the Liberty Justice Center claims Chicago violated city rules by not holding a full vote on the changes, and is violating the Internet Freedom Tax Act.Legal or not, Chicago's push to impose a Netflix tax has opened the floodgates.
Earlier this year, the Pennsylvania legislature expanded the state's 6% sales tax to cover digital downloads and subscription services like Netflix and Hulu -- but also music, e-books, apps, online games, and ringtones. And now Pasadena, California, has joined the fun, applying its own 9.4% tax on streaming video providers such as Netflix, HBO Go and Hulu. In fact, Pasadena is one of 46 total California cities that are rushing to embrace the tax to help shore up city budget shortfalls. But much like Chicago, there are a number of groups ready to sue over the move, claiming these cities don't have the authority:
"Jon Coupal, president of the Howard Jarvis Taxpayers Association, called the tax “very suspect.” The association’s legal team is currently investigating the legality of the new interpretation of the tax.Pasadena, however, says that city laws have always provided it with the authority to tax cloud-based services:
"We will be taking a very close look at this,” Coupal said. “If we determine this is an extension of an existing tax, then under the Constitution, they need voter approval. They can put as much lipstick on this pig as they want, but the pig is still a tax increase."
"Pasadena’s Finance Director Matthew Hawkesworth made his determination Thursday that the tax applies to video games and streaming services similar to cable “regardless of the content of such video programming, or the technology used to deliver such services,” according to a memo to City Manager Steve Mermell.The efforts to tax all cloud services are creating an absolute legal minefield over determining exactly where a cloud-based transaction is taking place, when to apply said tax, and who intends to collect it. Who pays sales tax when an app developer in New York relies on a cloud computing provider in New Jersey, and sells to customers in Illinois? Nobody appears to know and the answer may differ state by state. But one thing's for sure: lawyers certainly won't be going to bed hungry as cities rush to cash in on the rise of the internet video revolution.
"It’s our interpretation because of our code, these types of video services have always been eligible to be taxable," Hawkesworth said. "The administrative ruling is instructing the various companies that offer video service that the tax includes their services as well, and it will be incumbent upon them to collect the tax and remit it to the city."
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Filed Under: california, chicago, internet taxes, netflix tax, pennsylvania
Companies: netflix
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Now IANAL but this seems a bit complicated
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Re: Now IANAL but this seems a bit complicated
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Re: Now IANAL but this seems a bit complicated
Government clearly wants to get in on it too.
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Re: Now IANAL but this seems a bit complicated
OTOH it's not practical to be taxed based on the user's actual location, which will vary all the time and is difficult to discern at best.
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Re: Re: Now IANAL but this seems a bit complicated
Tracking all of this is terrible, and states in general arent willing to make broad simplifications like maintaining an easily accessable central database of tax rates and jurisdictions in their state.
But all this is besides the point. In ca services are not taxed, only tangible personal property. I really cant understand how it applies to my netflix subscription.
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Re: Now IANAL but this seems a bit complicated
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"from the tax-ALL-the-things dept"
I'm pretty sure, even without looking it up, that people using Netflix already pay at least 2 taxes to access the service.
But of course that as never stopped anyone from heaping more and more taxes on top of anything, if they can get away with it.
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Re: "from the tax-ALL-the-things dept"
We can only blame ourselves!
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I made this money.
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So unless YOU went out cultivated the land, on your own, milled it, prepared it, and consumed it without tools or education provided by someone else you are in that boat. ALL are in that boat. That being said, Obama can shut the fuck up on that front!
Ford once said “To do more for the world than the world does for you - that is success.”
While Ford was no fool, he sure as fuck paid little attention to his own musings. It is impossible for anyone to do more for the world that it does for them. No one does a single fucking thing without having first benefited by the efforts of someone before them!
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Naturally, shortly after, the second day of the 2012 Republican National Convention was themed "We Built It." And naturally, this was held in a stadium constructed using 62% taxpayer financing.
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I'm not a Republican, and I think Obama's statement was derogatory and belittles the efforts of entrepreneurs and small business owners. That infrastructure he is so proud of was built on the backs of the very people he stated didn't build that. Our contributions to society, be it taxes or effort, is what allows that infrastructure to exist in the first place.
I did indeed "build that", and so did every other American that worked his ass off and paid his taxes.
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Chill
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Will it keep smaller, new players out of the market because only the large corporations can afford to handle the tax nightmare?
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Ad-free services are to ad-free specialty channels as ad-supported services are to ad-supported channels. Not everyone can afford ad-free, so its still a popular option.
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I think they are (have been) trying to make the web just like tv. What they do not realize will be their demise.
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Netflix and others should just claim that the office their billing comes from is overseas and then only the Federal Government can charge taxes on imports.
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However, it's quite a bit more complex than that. Just having equipment in a state can make you liable for taxes in that state, and Netflix, for example, has worked with certain providers to put equipment that they own in server rooms all over the country.
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(cause everyone knows how quickly the tubes get worn out with all those gigabytes of data abrading the wires such that they have to be replaced so often /s)
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The real problem here is that, if it survives legal challenge, it will cement the monopoly certain online services already have. The barrier to entering the market for streaming video will have now have a complex taxation scheme that you need to support and start-ups may not be capable. In addition, since it can probably only apply to companies that have physical presence in California, it creates an incentive for start-ups to be built elsewhere (and CA does not need any more of those). Finally, if this catches on country wide, it will create an incentive to locate these types of companies in other countries.
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Packet Tax
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I will start paying via bitcoin or gift cards
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So I tied an onion to my belt, which was the style at the time.
So, in our case, it was literally one government entity attempting to stick it to another one in the same jurisdiction.
Anyway, we ignored it, somebody else sued, the interstate commerce clause prevailed, and I am not sure how this new idea is dramatically different from that experience.
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Dems love their taxes
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.. and just why are they involved? Oh...
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The Tax Poem
The Tax Poem
by
Author Unknown
Next
Tax his land, tax his wage,
Tax his bed in which he lays.
Tax his tractor, tax his mule,
Teach him taxes is the rule.
Tax his cow, tax his goat,
Tax his pants, tax his coat.
Tax his ties, tax his shirts,
Tax his work, tax his dirt.
Tax his chew, tax his smoke,
Teach him taxes are no joke.
Tax his car, tax his grass,
Tax the roads he must pass.
Tax his food, tax his drink,
Tax him if he tries to think.
Tax his sodas, tax his beers,
If he cries, tax his tears.
Tax his bills, tax his gas,
Tax his notes, tax his cash.
Tax him good and let him know
That after taxes, he has no dough.
If he hollers, tax him more,
Tax him until he’s good and sore.
Tax his coffin, tax his grave,
Tax the sod in which he lays.
Put these words upon his tomb,
"Taxes drove me to my doom!"
And when he’s gone, we won’t relax,
We’ll still be after the inheritance tax.
This poem is presumed to be in the public domain;
no copyright or credit information can be found.
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Hmmmm - First RICO case where States are the defendents?
Since they are all doing the same thing, jumping on the me too wagon, and especially if all of their State Attorney Generals belong to some form of Federal Attorney General organization, said organization could be targeted for criminal lawsuit, where they are all charged, convicated and sentenced together.
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Pron tax?
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PlayingDevil'sAdvocate
If this were the 1970's, you'd be receiving a video tape, which during transit would generate revenue from the mom and pop shop who bought them and provided rentals, the transportation companies that utilize the roads who brought them the tapes to rent, and so on along to commerce train... but now with digital dozens of points of commerce are gone and along with it a revenue stream.
Amazon, NetFlix, ITunes, what ever the service, it's called commerce... why Ecommerce got out of paying their fair share came down to the complexity of local, state, federal and international tax rates but that's an excuse from yesteryear and today's AI systems could easily compute for every tax region.
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Re: PlayingDevil'sAdvocate
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Not a big fan of more taxes
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It's like paying VAT in the EU
It works this way: if I sell a product to a customer in France, then I have to collect a "VAT" based on France's rate and pay it to the French government. If a customer in Austria buys the same product, I have collect the Austrian VAT and pay it to the Austrian government.
So, yes, the VAT is based on the customer's address, which may get screwy if a guy from California is on vacation in Salzberg: does he stay at a hotel in Germany or Austria to get a lower VAT? Or is he exempt because he's on vacation?
Large business can adjust their accounting to handle this, but small businesses can either not sell to all the EU countries or they can pay an accounting company to handle the VAT collection and payment for them.
So why shouldn't every US state or every city do the same thing? It's a quick way for them to make money, even if it's a huge burden on businesses.
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