Chicago Mayor Brandon Johnson’s proposed tax on large social media companies could face significant legal challenges. The tax, which amounts to 50 cents per user after the first 100,000, is intended to generate $31 million to address a budget shortfall of $1.15 billion. However, constitutional experts foresee a potentially unfavorable outcome if the tax is contested in court.
Details of the Proposed Social Media Tax
- Tax Structure: 50 cents per user over 100,000 users.
- Total Revenue Goal: $31 million.
- Budget Shortfall: $1.15 billion.
Mayor Johnson argues that this tax is a legal “amusement tax” aimed at major companies like Meta and TikTok. His administration believes that social media contributes to mental health issues among the youth, likening the companies to other “addictive vices” like tobacco.
Challenges from the Tech Industry
Industry leaders are expected to vigorously oppose the tax. Amy Bos, a spokesperson for NetChoice, argues that the financial burden will ultimately fall on local businesses that use these platforms for advertising. She claimed the proposal is not only shortsighted but also potentially unconstitutional, echoing a 1983 Supreme Court ruling against a Minnesota state tax on newspapers.
Martin Redish, a constitutional law expert at Northwestern University, believes the tax will likely not survive judicial scrutiny. He warns against singling out media platforms, highlighting First Amendment protections.
City’s Defense and Additional Perspectives
- City’s Position: City officials maintain the tax falls under the amusement tax category.
- Contextual Support: Minnesota is considering a similar proposal, termed a “modern-day mining tax” for data usage.
Opponents of the tax claim that attributing youth mental health issues solely to social media is misleading. However, the discourse around social media’s impact on mental health has grown increasingly urgent. Former U.S. Surgeon General Vivek Murthy has called for warning labels on social media platforms and noted insufficient evidence on the safety of these environments for young users.
Academic Perspectives
Academics like Daron Acemoglu and Simon Johnson have suggested imposing “sin taxes” on digital advertising revenue. They argue this could help shift business models away from methods that prioritize user addiction and emotional triggers.
Next Steps for the Proposal
Jason Lee, a senior adviser to Mayor Johnson, expressed optimism about the tax’s future. He emphasized that internet companies, which often benefit from significant valuations, should acknowledge their societal responsibilities. The aim is to use tax revenue for expanding mental health resources and care teams to assist in addressing crises without police involvement.
Despite legal uncertainties, Johnson’s administration is ready to advocate for what they believe could be a landmark intervention against the backdrop of a nationwide conversation on the responsibilities of social media companies.
