Lawmakers Push 10.25% Streaming Levies and New Compute Tax, Testing 1998 Internet Tax Ban
Updated
Updated · National Taxpayers Union · Jul 29
Lawmakers Push 10.25% Streaming Levies and New Compute Tax, Testing 1998 Internet Tax Ban
1 articles · Updated · National Taxpayers Union · Jul 29
Summary
State and federal lawmakers are advancing new taxes on internet-based activity—including a proposed tax on compute used for AI training, web browsing and other online services—despite long-standing federal limits on discriminatory internet taxes.
Those proposals are being pitched as ways to curb unwanted behavior and raise revenue, but critics say they recreate the complexity and market distortions the 1998 Internet Tax Freedom Act was designed to prevent.
Maryland’s digital advertising tax has already spent 5 years in litigation, while Illinois has enacted taxes on cryptocurrency transactions and prediction markets that critics say are cumbersome to calculate and likely to hit consumers.
Chicago has raised its streaming tax to 10.25% and added a Social Media Amusement Tax, leaving a Netflix subscription taxed at more than six times the rate of a DVD rental.
The broader fight signals a fraying bipartisan consensus behind the internet tax ban Congress made permanent in 2016, with opponents warning that taxing digital channels differently from offline equivalents could slow innovation and push activity elsewhere.