Week in Insights: Chicago’s Social Media Tax Gets Focus Wrong

The concept of Chicago’s new social media amusement tax makes sense: Platforms profit by extracting and monetizing personal data, and that extraction should be taxed with some value returned to society. But the tax’s structure reveals a misunderstanding of how surveillance capitalism really works.

By taxing the collection of data rather than the ownership of it, Chicago quietly prices access to a resident’s entire digital life at 50 cents, once.

Under the ordinance, which will likely be challenged, the city imposes a 50-cent monthly tax on social media companies for each Chicago user above a 100,000-user threshold, levied on the collection of consumer data.

That sounds meaningful on paper, but in practice, it treats data as a transactional event rather than a durable and reusable asset. Once a platform pays the fee, the data is theirs forever—free to be analyzed, resold, reconstituted, and monetized in perpetuity.

Social media companies don’t make money through the act of collecting data, but through exploiting it. Under the social media amusement tax, they can exploit it indefinitely for a modest fee.

Taxing data collection is like taxing timber only when cut—at a rate reflecting the value of raw timber—and then ignoring the lumber mill, furniture factory, and real estate built from it.

Worse, this tax model creates exactly the wrong incentives. By attaching liability at collection, platforms are effectively rewarded for buying, sharing, or pooling datasets. The result isn’t less surveillance or consumer data exploitation, but more data brokerage, more consolidation, and a big moat around the companies best positioned to exploit user data at scale.

—Andrew Leahey

The structure for Chicago’s new social media amusement tax structure reveals a misunderstanding of how surveillance capitalism really works.

Photographer: George Chan/Getty Images

Welcome to the Week in Insights for Bloomberg Tax’s latest analysis and news commentary. This week, experts analyzed the Pillar Two “side by side” deal, California’s SALT debate, and more.

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Insights

California’s 2026 SALT Debate Should Focus on Predictability

Businesses operating in California should treat the state and local tax deduction conversation as a practical risk signal, not a cable-news segment.

‘Side by Side’ Global Tax Deal Tests Pillar Two’s Staying Power

Carving out the US from the OECD’s global minimum tax plan will force companies to prepare for a tax regime that will operate in one form for two years and quite differently thereafter.

Illinois Deed Sale Case Shows Lack of State-Level Tax Clarity

A pending federal appeals court ruling involving an Illinois tax foreclosure case will address how immunity doctrines operate when a foreclosure is found to effect an unconstitutional taking and result in an excessive fine.

Several Indirect Tax and Digital Trade Trends Will Shape 2026

Digital trade keeps growing, and so does the pressure on governments to update their tax rules. Alignment is now a key theme.

Employers Must Confront Tax Changes on Tips, Overtime, and Meals

Information reporting and income tax changes affecting cash tips, overtime, and employer-provided meals will warrant companies’ review of payroll systems and accounting policies in 2026.

Georgia’s Plan to Eliminate Income Taxes Would Burden Businesses

Eliminating the income tax in Georgia would lead to future revenue uncertainty, undermining the state’s business-friendly reputation.

UK Joins Global Trend in Transfer Pricing Reporting Compliance

Additional transfer pricing disclosure requirements have become the norm, and multinationals should anticipate continued divergence in national requirements, in the absence of a major initiative from the OECD.

Columnist Corner

Technically Speaking design by Jonathan Hurtarte/Bloomberg Tax

New York Gov. Kathy Hochul’s (D) budget proposal misses an opportunity to create a new revenue stream, Andrew Leahey argues in his latest Technically Speaking column, writing that “the time to prepare for precarity is during periods of financial stability.”

Increasing New York’s top marginal corporate tax rate to bring it closer in line with neighboring states—and making it permanent—would help ensure the long-term viability of universal childcare and other public investments, Andrew says. Read More

News Roundup

Trump Sues IRS, Treasury for $10 Billion for Tax-Return Leak

President Donald Trump sued the US Treasury and Internal Revenue Service for at least $10 billion over an unauthorized disclosure of his tax returns to the press during his first term in office, potentially putting American taxpayers on the hook for a massive payout.

Alaska Governor Proposes First Ever Statewide Sales Tax

Alaska Gov. Mike Dunleavy (R) called on lawmakers to enact the state’s first-ever sales tax to help address a budget gap caused in part by declining revenue from the oil and gas industry.

EU Sees Reopened OECD Digital Tax Talks Departing From Old Plan

There is “still willingness from all jurisdictions” at the OECD to restart stalled negotiations for a global tax on digital services, but the talks will likely deviate from the framework’s current construction, according to a senior EU official.

Senate Democrat Urges SEC to Probe Tribal Tax Credit Sponsor

Senate Finance Committee ranking member Ron Wyden (D-Ore.) is again pushing the Securities and Exchange Commission to investigate a company that sold nonexistent tax credits.

Tax Management International Journal

Can the OECD Reshape Cross-Border Work Taxation in a Digital Age?

KPMG elaborates on practical solutions for cross-border workforce taxation in response to OECD consultation.

How to Mitigate Customs Valuation Risks of Price Adjustments?

CJEU’s Tauritus ruling clarifies under which conditions retroactive pricing adjustments lead to changes in EU customs valuation.

Career Moves

Solicitors Brings Back Tom Evans as UK Partner in Birmingham

Tom Evans joined mfg Solicitors as a partner in its tax and succession planning division in Birmingham, the firm announced.

Davis Polk Taps Brian Grieve as Partner in New York Tax Practice

Brian Grieve joined Davis Polk as a partner in its tax practice in New York City, the firm announced Monday.

Dickinson Wright Adds Tax Attorney Hale Stewart in Austin

Hale Stewart joined Dickinson Wright as of counsel in its captive insurance practice in Austin, Texas, the firm announced.

Perkins Coie Adds Tax Lawyer Mohsen Ghazi as Partner in Chicago

Mohsen Ghazi joined Perkins Coie as a partner in its private client services practice in Chicago, the firm announced Tuesday.

Eversheds Boosts Tax Team With Return of Ex-IRS Official Kiessig

Taylor Kiessig rejoined Eversheds Sutherland as a partner in its tax practice group in Washington, D.C., the firm announced Tuesday.

Wilkin Chapman Rollits Hires Monika Bone as Estates Partner

Monika Bone joined Wilkin Chapman Rollits as a partner in its wills, estates, and tax planning team in York, UK, the firm announced on Thursday.