Netflix Tax was proposed as an attempt to support the Metropolitan Transportation Authority (MTA) in its financial crises that arose as a result of the COVID-19 global pandemic.
As per the proposal, a 4 percent tax will be levied under the name of digital sales tax and this will be used to aid the MTA and other subway systems.
It was included in the 2024 Budget Proposal by Governor Kathy Hochul. The assembly was discussing the One-House Budget proposal and was looking into alternative measures suggested by the assembly members.
A few of the substitutive measures included Uber surcharges and taxes from streaming services.
The tax proposal, however, received little support from the residents of the Upstate area. Let’s have a look at what the residents had to say about this.
Peter Humphrey, a resident in the Upstate area responded that if they (the residents) has to fund the metro costs in New York City as part of what the rest of the state was doing, then he was uncertain about what was going to come soon.
He opined that this leads to a situation where nobody knows what the government of the New York state and the administration would add to the tax bills and introduce new proposals for the inconsistencies that they face in the downstate area.
Another resident, named, Pedro Benitez, said that being from Rochester one of the issues he had always faced is that they never get anything. By ‘they’ he meant the people of Rochester and neighboring parts and everything benefits goes to New York City.
He added that he was not supporting the decision to levy taxes from all of the states for an issue that New York City was facing and for something from which they will never get any benefits.
Jake Ashby, the Senator of the New York state who is a fellow Republican viewed that he gets what the tax was intending. Ashby continued that there was a ton of money going down there to support the MTA.
He further said that it was a huge transit system, but when it is looked at as the disparity between the MTA and the rest of the transportation systems in the New York state, anyone could understand that it was quite imbalanced.
Phil Steck, NY State representative in the assembly and fellow Democrat said that he was against the Netflix tax.
He added that one of the argument points that the tax has was the impact New York City holds on the rest of the state. He also provided a counter-argument, that said, everyone benefits from the success of the city. He viewed that there were better ways to pay for that.
He also suggested an example which was to reinstate the stock transfer tax to have a special allotment for the MTA.
He said that the base point was that since one benefits from the MTA and New York City, one has to pay for it, which would be the only fair and just act from the view of Wall Street. He contrasted that it had to be collected through Netflix taxes.
Many other states have introduced similar taxes. Since 2019, there are some states that collect streaming taxes. Given below are the names of the states:
States That Collect Streaming Tax
- Florida
- Pennsylvania
- North Carolina
- Washington
Surprisingly, some cities have also passed Netflix tax additions. The cities are given below.
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Cities That Have Netflix Tax Additions
- Chicago
- Illinois
Initially, taxes were not collected on the streaming platform. It was not mentioned anywhere in the tax laws.
This could be understood as when the tax laws were drafted, there were only physical goods and services available and no one had thought about the possibilities of virtual goods and services and online streaming platforms.
Since there are multiple streaming platforms competing with each other the state governments decided to collect taxes from these subscriptions as well.
Netflix on its official website says that tax rates can vary according to the country, state, territory, and city that the user resides in or uses the platform. It can also be based on the applicable rate at the time of the Netflix charge. It also mentions that these amounts are subject to change over time as per the local tax requirements.
Each month the subscribers of the platform are only paying a particular subscription fee and the additional taxes on this will cause the monthly amount that the users have to pay to increase. The state administrations are making moves to capitalize on the movies, music, TV, and other media consumption by Americans.
Michael Mazerov, a senior-level official at the Center on Budget and Policy Priorities said that this adoption was a fast-moving policy development. He added that more and more states and cities were introducing bills on the same.
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