Chicago successfully taxes streaming services • Hacker News Board

Re: Chicago successfully taxes streaming services

#91

Post by cljs-js-eval » Sat, May 18, 2019, 8:40 PM UTC

rrrrreeeee wrote: post #31

Shivetya wrote: post #14

Chicago is in the hole for nearly thirty billion dollars. They have been floating the idea of a ten billion dollar bond with the debt structured in a way which lets current politicians escape the fallout from its payment and not having to raise property taxes. The state of Illinois is not well off either with debts estimated at the low of one hundred thirty billion to two hundred fifty billion. An Illinois proposal j…

Do the employees and employers not pay into a separate fund that cannot be touched? I fail to see how it's the fault of the pensioners. It's absolutely archaic if the future taxpayers have to pay for a retirees pension. In Canada we have pension funds that are separately funded entities that are payed into over an employee's career.

It's archaic and should be changed, but the way the system works in the U.S. is pretty well known to its citizens, which makes it at least partially the fault of the pensioners. I live in Chicago and every retired schoolteacher and police officer I meet knows full well that they're making an exceptional amount of money in retirement. It's usually part of why they took the job.

Re: Chicago successfully taxes streaming services

#92

Post by sct202 » Sat, May 18, 2019, 8:45 PM UTC

rrrrreeeee wrote: post #31

Shivetya wrote: post #14

Chicago is in the hole for nearly thirty billion dollars. They have been floating the idea of a ten billion dollar bond with the debt structured in a way which lets current politicians escape the fallout from its payment and not having to raise property taxes. The state of Illinois is not well off either with debts estimated at the low of one hundred thirty billion to two hundred fifty billion. An Illinois proposal j…

Do the employees and employers not pay into a separate fund that cannot be touched? I fail to see how it's the fault of the pensioners. It's absolutely archaic if the future taxpayers have to pay for a retirees pension. In Canada we have pension funds that are separately funded entities that are payed into over an employee's career.

In Illinois and Chicago, the government has been playing games like declaring pension holidays where the contributions shift to the future. The unions control a large base of voters and haven't objected, even though this basically endangers their retirements. There's going to be a point where the funds will literally run out of money, and I doubt that there will be enough things to tax in a year to make up the difference that should have been paid in over decades.

Re: Chicago successfully taxes streaming services

#93

Post by tomohawk » Sat, May 18, 2019, 9:01 PM UTC

I love Chicago, but its basically bankrupt. They can raise taxes all they want, but they won't be able to raise enough to cover the problems they've created.

Re: Chicago successfully taxes streaming services

#94

Post by DuskStar » Sat, May 18, 2019, 9:24 PM UTC

anamexis wrote: post #13

dontbenebby wrote: post #8

I thought the main reason states collect tax on Amazon purchases is because they have a presence in a state (distribution centers, warehouses, etc)? I'm confused how the legal thinking goes that a company not based in Chicago, offering services on the internet, can be taxed. (They don't even ship DVDs to most customers, whereas Amazon was shipping physical goods)

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.)

Re: Chicago successfully taxes streaming services

#95

Post by refurb » Sat, May 18, 2019, 9:25 PM UTC

rrrrreeeee wrote: post #44

lotsofpulp wrote: post #36

Earlier quoted context omitted.

How do you ensure the funds are invested properly, and not in a nephew's real estate development project? How do you ensure the correct assumptions are used in calculating how much to contribute into the fund in the first place? You can adjust mortality tables and investment return assumptions to make the benefits seem cheaper than they are. The government can even choose to forego making their understated contributi…

The employer isn't liable for the pension at all. Neither is the employee. All they do is pay into the fund. Instead, there is an entirely separate legal entity (the pension fund) that controls and distributes the assets. The fund releases reports regularly on the health of the fund. The contribution calculations are usually included in those reports. The investments by pension funds are usually in long term infrastr…

The same problem exists in Canada as well.

https://www.cfib-fcei.ca/en/research-economic-analysis/canad...

Re: Chicago successfully taxes streaming services

#96

Post by jazzyjackson » Sat, May 18, 2019, 9:31 PM UTC

thrower123 wrote: post #70

boulos wrote: post #41

Earlier quoted context omitted.

I assume you mean well, but it’s not about your residence (or for businesses the place where they are incorporated) but rather where you do business. Just because I’m in California doesn’t mean I can do business in the EU without complying with their laws. Same goes for Chicago. You’re not required to do business there, but they can fine you for non-compliance if you are doing business. Note: all of this is in refere…

Are you actually doing business in those places, if people from there just go to your site that is hosted in your home jurisdiction? I'm not sure that it logically follows. Obviously, governments interpret the situation in the way that accrues them maximal power and brings the most activity into their purview.

A free service probably isn't going to get sued into compliance if you accept sign ups from EU, but if you accept payment from EU that definitely counts as 'doing business' and you should expect to comply with local regulations.

Re: Chicago successfully taxes streaming services

#97

Post by tomjen3 » Sat, May 18, 2019, 9:32 PM UTC

gabea wrote: post #2

Would we ever see legislation that would require companies to not increase the cost of digital goods after a tax is instituted? Alternatively, could we not just have a fixed tax contribution on goods each year rather than making it piecemeal per digital good sold? I find it weird to tax goods unless the existence of the tax is to change behavior. (not sure if that is the goal here?)

The problem with that is that either a) you go under the margins and each sale is a loss, meaning that the company will offer no services at all; b) you stay under the margins, but not enough for the investors to keep investing (they expect higher profits elsewhere) and so the company now has no investors; c) you cut into the margin so much that it is not worth it for the company to continue developing new stuff.

In the case of c they will most likely continue to develop new stuff, based on their revenues elsewhere, but at that point the high tax areas are leaching of other low tax areas where the company can afford to fund innovation.

That assumes that you can find out when a company increase prices based on higher taxes, as opposed to anything else, which you cannot do.

The only real solution is to tell the retirees that they are not getting the money they counted on; that is hardly unfair as I am sure nobody here expects there to be any retirement funds for them, except what they can save up.

Re: Chicago successfully taxes streaming services

#98

Post by bscphil » Sat, May 18, 2019, 9:36 PM UTC

mindslight wrote: post #34

Maybe instead of putting on a show in court, Netflix et al should simply stop asking people for their physical addresses ? I mean, that is the underlying vulnerability that will allow this push to succeed. We were so excited for the promise of the Internet to overturn all this legacy bullshit. Then the legacy bullshitters got here, built a bunch of proprietary services on top of HTTP, marketed them as progress, and a…

>Maybe instead of putting on a show in court, Netflix et al should simply stop asking people for their physical addresses? I mean, that is the underlying vulnerability that will allow this push to succeed.

That's an interesting point. There are internet services that don't require an address to pay for something. What are their legal obligations, if any, with respect to local taxes? I assume quite a few local laws don't explicitly make this a loophole, so does that mean anyone doing business online has the legal obligation to collect address information? That would be an odd situation, and it doesn't seem to be the one we're in.

It seems like the situation on the ground is that in reality only companies big enough to attract attention are at risk from this. My understanding of the legal situation is that the federal government in the United States provides the legal basis for ensuring that a business in one state or city abides by the laws of another state or city when it sells to its residents. But they seem uninterested in actually enforcing this.

It's interesting to think about what would happen to companies of various sizes should they refuse to implement this tax. Small / medium size companies? Probably nothing. In fact it's unlikely that many of them will implement it. Suppose Netflix refuses; it now becomes illegal for Chicago residents to purchase Netflix subscriptions (unless they have some mechanism for the citizens to pay the taxes themselves, as some states do; this usually doesn't happen though). But Netflix can say "no problem", we just make web servers available over the Internet, we don't check whether someone's logging in from Chicago. What does Chicago do? They either ban the Netflix domain at the local internet level, or (more likely) they get the Federal government involved and have fines put in place to penalize Netflix for not paying taxes to Chicago.

I'm not a lawyer though, and it would be interesting to get one's point of view of one here since questions about jurisdiction come up here all the time, e.g. whether US companies have to comply with EU laws.

Re: Chicago successfully taxes streaming services

#99

Post by bscphil » Sat, May 18, 2019, 9:43 PM UTC

jazzyjackson wrote: post #96

thrower123 wrote: post #70

Earlier quoted context omitted.

Are you actually doing business in those places, if people from there just go to your site that is hosted in your home jurisdiction? I'm not sure that it logically follows. Obviously, governments interpret the situation in the way that accrues them maximal power and brings the most activity into their purview.

A free service probably isn't going to get sued into compliance if you accept sign ups from EU, but if you accept payment from EU that definitely counts as 'doing business' and you should expect to comply with local regulations.

I think the question everyone here is interested in having answered is "what if you don't?" The EU has no jurisdiction here (in my country); the law applies to the citizens of those countries. Sure, some countries might be willing to extradite you to the EU for breaking laws that apply there, but that seems rather extraordinary (in the case of a law that applies to internet sites), not to mention an outrageous abuse of power.

Re: Chicago successfully taxes streaming services

#100

Post by SilasX » Sat, May 18, 2019, 9:49 PM UTC

whack wrote: post #23

Instead of trying to tax purely digital activities, why not just raise the income/property taxes on the people who live or work in your city? This would be a lot less regressive, and would prevent people from getting around it just by changing their credit card billing address. Not to mention the beauracratic nightmare of requiring SaaS companies to keep track of every customer's physical address and local tax regula…

Because raising progressive taxes that are already high make it likely you’ll trigger a death spiral where high earners flee, raising the taxes you need to levy on the rest, etc.