More and more people are streaming digital content than ever before. This has lead to some states taxing these online services.
Netflix alone has generated nearly 150 million subscribers. Now that cable is slowly dying online streaming services are dominating the market.
The city of Chicago alone made over 2 million dollars in 2019 after putting a 9% sales tax on digital entertainment.
Here in North Dakota we currently only tax on physical goods, but could that change in the future?
I talked to the North Dakota Tax Commissioner who says that over 30 states have or are starting to propose bills for this new tax.
ND Tax Commissioner, Ryan Rauschenberger says, “I think it would be different if it had always been taxed from the date they were introduced into the market and people purchased it. I think it would be fairly seamless and people would be used to the tax. I think it would be very difficult right now to go in and start imposing our state 5 percent tax and our local tax and all these digital services without some major push back.”
This tax is typically only based on subscription, not per view or how many clicks you have. We don’t tax cable here in North Dakota, unlike other states.
Which Rauschenberger says is like comparing apples to apples, when it comes to the possibility of it happening here.
But what all do digital services entail?
- Online data processing services.
- Downloaded software.
- Downloaded books
- Downloaded music
- Movies or digital videos
- Also all downloaded electronic goods
Chicago’s digital entertainment and services tax says could generate up to $12 million per year.