Categories: Mobile & ElectronicsShow NotesTV, Satellite & Cable

Taxes on Netflix? A look at the new trend hitting streaming services

Joel Larsgaard | February 26th, 2018

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Not to wade into the political waters and comment on the state of taxes in America, but it is astounding how many different goods and services federal and local governments decide to tax.

It seems that nothing is outside of the realm of taxation in modern America. Now, taxes on streaming services are popping up in cities and states around the nation.

The current scope of “Netflix taxes”

That’s right, the so-called “Netflix tax” has just gone into effect in Pennsylvania. Spotify and Hulu are also companies that fall under the jurisdiction of this 6% sales tax.

Digital newspapers and magazines do not fall under this taxation umbrella. It does appear, however, that these digital taxes are catching on across the country.

Chicago already employs a 9% “cloud tax” that impacts consumers in a similar way and goes even further in scope. The major Midwestern city expects to bring in roughly $12 million a year via this new revenue generator. Minnesota is another state that has also implemented a tax on “digital products” recently. You’ll even pay a tax on digital greeting cards there.

Now that momentum on these sorts of taxes exist, don’t be surprised if your local representatives start debating bills that would tax your cloud services in a similar way very soon.

Of course, if you look at your cable, cell phone or landline bill closely you’ll see that you are being taxed on those services. This is a sign of the times that local governments won’t take the monetary hit because of cord cutters or cord nevers. In a similar sign of the times, the state of Georgia decided to tax electric vehicle owners $200 a year to make up for the lack of EV drivers paying gas taxes.

How can you avoid these taxes?

Some Netflix users have taken to using a different billing zip code to avoid paying this unpopular tax in municipalities where it exitsa. It certainly isn’t a strategy that we would recommend. And it could get you into trouble at some point. But it is one way that consumers have acted out against this unpopular new tax trend.