tax; streaming service; sales tax; amusement tax


Over the last few years, Netflix and other video streaming services have erupted to become a preeminent form of entertainment for millennials and the public at large. With traditional forms of entertainment waning, video streaming services represent a novel source of revenue for cities. Local governments currently have numerous tax approaches that may be used to cover these services. Different cities and states have taken distinctive approaches to taxing these services. Certain jurisdictions tax them in line with traditional pay-TV providers under utility taxes, while other jurisdictions tax them under sales or amusement taxes. This Note considers these different approaches, with a focus on Labell v. City of Chicago, a 2018 case upholding Chicago’s application of its amusement tax to Netflix and other video streaming services. Recognizing the various constraints that state and federal laws place on local taxation, this Note outlines the benefits and drawbacks of different approaches and highlights the challenges that cities should consider when issuing interpretive rulings to bring video streaming services into their tax bases. This Note suggests that other cities should draw on Labell and follow Chicago’s lead in taxing these services under existing amusement tax laws where possible, given the easier procedural hurdles, strong theoretical backing, and recent supporting precedent from the U.S. Supreme Court.