We are actively working against it. I work out of 1871, a Chicago incubator, and I'm surrounded by several hundred companies that are all going to have to implement this tax in their software if they want to sell locally.
We're going to kill this thing.
UPDATE:
Sign the petition here: https://www.change.org/p/chicago-city-council-repeal-the-chi...
And while I'm probably on the same page as you re: Chicago's profligacy, let's face it: Chicago needs to raise money. Economically, aren't consumption taxes better than raising the same money from income or property taxes (or head taxes or corporate taxes)? I'd argue that instituting a city income tax or raising property taxes will move more people out of Chicago than taxing Chicago consumers[1] for internet services.
[1] The effective incidence of sales taxes is complex. But I imagine most Internet services will be able to pass most of the cost onto consumers.
City governments will need to adapt to the changing markets and find new revenue streams for sure, but I see the current move as anticompetitive and a bald faced money grab. Some people in the free market have decided that the record stores, sporting events and other local entertainment in the Chicago area are not as good of a value as what cloud services provide. The answer is not to hold these people hostage and tell them they have to pay up regardless. The solution is to take a hard look at what is driving consumers away from local entertainment options and find ways to help your local companies adapt to a changing market.
Chicago and Illinois are not high-tax high-spend jurisdictions. The top income tax rate in republican Virginia is almost double the historical income tax rate in Illinois. Their fiscal problems are the result of being low tax jurisdictions with moderate expenditures.
A uniform sales tax seems more palatable (as an alternative to an income tax, not in addition to one); however, this is not a uniform tax, it's a targeted tax on streaming services and other Internet services.
Making it even less likely that a new company would want to start there.
> We're going to kill this thing.
Thank you. This kind of thing needs a rapid response wherever it crops up, lest it spread elsewhere. "This was tried elsewhere and quickly repealed" is an argument that makes it far easier to vote down such measures elsewhere.
> This tax is an job-killing...
> ... several hundred companies that are all going to have
> to implement this tax in their software...
edit: Also the ones that sell the services can't be compelled to collect the tax and as such, moving offices away from Chicago saves the cost of tax collection implementation[1]
Back to my original question: how to you determine which tax changes to support and which to oppose?
How is this different than any other local tax in that regard?
Now, of course, if the COUNTY decides to implement a new tax, that's a whole new set of paperwork that has to be done. But it still only affects the businesses in that locale.
To tax EVERY company that does any kind of business with any customer located in the city means that now tens of thousands (?) of companies have to price this tax in.
Where do we end up when every streaming company has to separately track and pay taxes in hundreds of thousands of municipalities, counties, states across the country?
You are only partially right there. The local presence requirement is for the obligation to collect the tax. If your company doesn't have a local presence, your customers are still required to pay the tax themselves. Very few tax payers actually follow that rule which is why local municipalities are so adamant about the taxes being collected by the business.
The Netflix side of this tax is technically on consumers so Netflix has no real legal obligation to include it on their bills. So it seems to follow the same rules of any other local tax.
Fewer Chicagoans, apparently, are employed in building network infrastructure and data centers than in things like video rental and so on, and the more people who are happy to use Netflix the more money flows out of Chicago's local economy. Meanwhile the cost of providing services within the city presumably remains about the same. I gather Chicago has massive unfunded pension obligations due to union lobbying and so forth, but for all practical purposes those are like any other unwanted financial obligation, they're not going away unless you can come up with a good reason why those secured creditors should give up the property interest they negotiated.
several hundred companies that are all going to have to implement this tax in their software if they want to sell locally
Well, this isn't very logical. First, there are 3 million people in Chicago which is a significant market, so it's very unlikely that any firm is going to suddenly refuse to do business with anyone in Cook County even though the administrative cost of said business is due to rise. Where a business is located is wholly irrelevant in this case because it's a consumption tax, so how is it going to kill any jobs in Chicago?
Also, why would you expect these companies to implement the tax in their software? That would be absurd. There are lots of software-as-a-service companies that take care of calculating sales taxes and suchlike so that other companies don't have to, just as there are companies that specialize in administering payroll or other business tasks so that firms can focus on their core competency. From a startup's point of view the additional administrative overhead is likely to be marginal.
We're going to kill this thing.
Oh stop. It's easy to stand up and say you're going to be against some unpopular measure, but that doesn't address the deeper problem. What is your better alternative solution? Forgive me for touching on national politics, but I'm reminded of the national Republican effort to kill Obamacare; I understand what your party dislikes about it, but after 50+ votes to repeal it and endless speechifying there's no results and no concrete alternative on the table. The repeal argument depends on a nostalgic argument that everything was working great before the unwanted policy came along, but the reality is that the previous systems were deeply unpopular and dysfunctional.
It's not that you shouldn't be against this proposal, I share your belief that casting around for new things to slap taxes on is a bad way to shore up public finances. But your arguments are shallow and being against things isn't a real economic program. What positive proposals do you have?
as someone who has worked in this before... The data is not as accurate as you might expect it to be, tax jurisdictions overlap zip codes inconsistently, the services are expensive and there are the integration costs that are perpetual.
all of these challenges can be satisfied, but to dismiss it and go off and assume it's a marginal cost is a tad ignorant; especially for a startup that is being bootstrapped by the founder(s).
Our positive proposals are here: http://www.illinois.gov/gov/documents/compiledpacket.pdf
But whether you agree with agenda or not, it does not diminish the fact that this particular tax is counterproductive.