CHICAGO — Today, NetChoice filed a new lawsuit against the City of Chicago to challenge its newly enacted “Social Media Amusement Tax.”
The tax violates free speech rights, unfairly discriminates against digital publications, violates federal law and harms Chicago residents and their businesses. NetChoice is suing to ensure protected online content is able to flourish without unlawful burdens.
“The government cannot single out publishers for disfavored tax treatment. But that is exactly what Chicago’s social media tax does. This tax penalizes a subset of online publishers for no other reason than they are popular. The Supreme Court has consistently recognized that this discrimination violates the First Amendment. And federal law recognizes that taxation cannot be imposed in a discriminatory manner. Chicago did not get the message,” said Paul Taske, Co-Director of the NetChoice Litigation Center. “This is a targeted strike against America’s most popular publications; it will not stand.”
“Beyond the legal problems, this tax is short-sighted. Ultimately, Chicago residents and their businesses should expect to see the cost of advertising dramatically increase. That means increased costs for Chicago businesses doing all they can to survive—local restaurants, auto dealers, artists and more will be the hardest hit under this proposal. This is a lose-lose for Chicagoans’ free speech, businesses and residents alike.”
Read the complaint for NetChoice v. Chicago, filed today in the Circuit Court of Cook County, Illinois, HERE.
WHY IS NETCHOICE SUING CHICAGO?
- The Social Media Amusement Tax is unconstitutional: The Supreme Court struck down this exact type of audience-based media tax in the 1983 case Minneapolis Star Tribune v. Minnesota, where Minnesota unconstitutionally taxed newspapers only after they exceeded a $100,000 threshold. That defies the First Amendment by singling out media companies based on audience size. The parallels in Chicago’s new tax to this case raise significant constitutional concerns.
- It violates federal law: Chicago’s tax violates the Permanent Internet Tax Freedom Act (PITFA) because it targets digital services while letting traditional social venues and community engagement centers off the hook. This is precisely the discriminatory tax Congress intended to prevent.
- It hurts Chicagoans and their businesses: The proposed tax harms Chicago residents by increasing costs for services and/or reducing access to digital services if they exit the market. This simultaneously hurts small businesses, including restaurants, auto dealers, and community organizations, by raising prices or limiting access to vital online marketing and communication tools.
NetChoice is a trade association dedicated to vigorously defending free expression and free enterprise online.
Read the complaint HERE.
Find case resources for NetChoice v. Chicago HERE.
Please contact press@netchoice.org with inquiries.