Several cities and states are considering levying a tax on streaming entertainment services to help make up for declining sales taxes and other revenue losses, USA Today reports.
Here's how the proposed new fees could affect you — or, perhaps, do already.
So, what exactly is a "Netflix tax"?
It's a small fee, typically less than $1 per month (though it could add up to more than $50 a year if you subscribe to multiple streaming services), that's tacked on to your streaming subscriptions.
Why are state and municipal governments instituting or considering these taxes?
In a nutshell, fewer people are subscribing to cable or renting videos (RIP, Blockbuster), and the governments are looking to make up for revenue from cable-bill and sales taxes.
"The way, particularly, municipalities rationalize this is, 'Well, we don’t have Blockbuster Video anymore. We were charging them tax, that's [gotten] replaced by streaming services like Netflix, so for us it's really just replacing one tax with another for the exact same service,'" Larry Downes, project director of Georgetown University's Center for Business and Public Policy, told USA Today.
Which states and cities already tax streaming services?
According to USA Today, Chicago, Florida, North Carolina, Pennsylvania, and Washington all already tax streaming entertainment. In Chicago, it amounts to about $10.79 a year for a typical Netflix or Spotify subscriber.
Alabama, Illinois, Louisiana, Maine, West Virginia, and the California city of Pasadena have all considered various forms of taxing streaming and digital entertainment.
Is there any opposition to these taxes?
Lots of it. Netflix itself, government officials, trade organizations, and taxpayers have all spoken out against the fees, with some citing federal law. Opposition has helped nix the tax in at least one state; Kentucky started taxing Netflix in 2015, but a state court ruled that the state can't treat the digital-streaming service the same way it would traditional pay-TV services.