South Dakota v. Wayfair [1] last year overturned the requirement of a physical presence for a state to levy taxes.

Most states with sales tax have since passed legislation to tax online purchases.

[1] https://en.wikipedia.org/wiki/South_Dakota_v._Wayfair,_Inc.

edit: It seems as though HN's linkification drops trailing periods, so that link doesn't work when clicked.

Enclosing a link like that in parentheses will make it work. (https://en.wikipedia.org/wiki/South_Dakota_v._Wayfair,_Inc.)

Interesting. Is there a limit on what level of entity can do this? (Ex: in PA it feels like every two feet you're in a new township, then there's the county and state)

I'm not necessarily anti-tax, but I don't envy a developer who needs to track down to the township level who taxes what in what way while providing goods across the entire USA.

IANAL but, as I understand it, the Supreme Court decision in South Dakota vs. Wayfairwas based on state laws that do not "unduly burden" interstate commerce. Kennedy's opinion cited adoption of "the Streamlined Sales and Use Tax Agreement. This system standardizes taxes to reduce administrative and compliance costs: It requires a single, state-level tax administration, uniform definitions of products and services, simplified tax rate structures, and other uniform rules." There is also a minimum sales threshold.

Tickets for local events are one thing. It's not clear to me that a city tax on a streaming service meets the tests that the Supreme Court said should be met.

It's an entertainment tax. Netflix supplies entertainment to people in the city of Chicago, and so the city of Chicago taxes that entertainment.

Same thing with concert tickets and other forms of entertainment.

And if every city and town has their own tax that's different in some way? Then what?

Or alternatively, could Netflix ban all residents of Chicago?

1. Businesses have to incorporate the local tax code to any area they provide services in. Same as any brick-and-mortar business right now.

2. It becomes burdensome for businesses to comply so they ask the federal government to occupy the field and standardize.

I don't really know why people expect businesses that deliver their products digitally to be treated differently from everyone else.

But we're talking about online businesses here. This isn't isolated to the US. We're talking about complying with the requirements and taxation of any city in the world. There is no federal government to address there.

Welcome to business.

Yes, Netflix chooses to serve Chicagoans, and if they’d prefer not to, they can. There have been a few “make the customers angry, so they write to their representatives” attempts throughout history, but I doubt a 99 cent tax for Netflix is enough to risk it.

As a related thing, look at Spotify vs Apple on the App Store. That 30% is material.

But I don't think this is actually possible in the EU in the long term. They want to do away with companies only serving digital services to some EU member states, but legislation still applies per country. What if the rest of the world decides that this stuff is great for taxation as well? Then you won't be dealing with the tax code of an American city, you'll be dealing with the tax code of a city in some small country.

I think that has to be overturned with the way companies are consolidating to costal cities, else in the long run there won’t be tax collected at all.