Senator’s Twitter poll asks about sales tax on streaming services
A recent online poll result on the Twitter account for Nebraska state Sen. Machela Cavanaugh showed overwhelming opposition to the idea of paying sales tax for online streaming subscription services like Netflix, Hulu, and Apple TV.
Would you support a Nebraska state 7% sales tax on digital entertainment services? (i.e. Netflix, Hulu, Apple TV, etc)
— Senator Machaela Cavanaugh (@senatormachaela) June 4, 2020
A state political party and a Fox News pundit quote-tweeted the poll, likely driving more traffic to the question. After the responses were in, nearly 90% of more than 2,000 Twitter users said they were opposed to a 7% state sales tax on digital entertainment.
But despite all of this vocal opposition, some of the respondents may not know they’re already paying the tax.
Nebraska, like most states, has a wide variety of sales tax exemptions. About two-thirds of the consumer purchases made in the state are not currently taxable, making it especially easy to lose track of which are taxed and which aren’t.
But digital streaming services, like a lot of online purchases of physical goods, are not in the exempt category in Nebraska or in most states.
Nebraskans who subscribe to Netflix, or buy an app on the App Store or Google Play, will find their grand total somewhere between 5.5-8% higher than the posted price, depending on the combination of state and local sales tax imposed in their city or county.
Maybe the results would have been different if the poll posed a question that included the understanding that the tax was already being levied. The wording did seem to leave open the possibility that it was asking if Nebraskans would accept a separate or higher 7% tax on top of the tax consumers pay now, since the state’s take is only 5.5% currently.
Chicago, for example, includes online streaming in its 9% “amusement tax,” which previously applied to events like concerts. Although Illinois and Chicago did not collect sales tax on streaming at the time of the tax’s implementation, the concept is similar to the restaurant taxes in Omaha and other Nebraska cities. Here, patrons pay the sales tax on their bill, in addition to a privilege tax that seems like a sales tax.
However, sales taxes on streaming services are not in themselves a special tax or an unjustified way to collect sales tax. Back when Nebraskans were more likely to buy or rent a physical copy of a movie at a store, sales tax was collected on those purchases without much controversy.
You can read more about why sales taxes are structured the way they are, and the problems those inconsistencies can create, in our report on Nebraska’s sales tax.