Chicago mayor proposes groundbreaking tax on social media companies

CHICAGO (WGN) — To help close Chicago’s nearly $1.2 billion budget shortfall, Mayor Brandon Johnson is proposing a new tax targeting social media companies. It’s a move no other U.S. city has tried.

“Just like we tax other addictive vices that are bad for our health like nicotine and tobacco, it is far past time to tax social media companies the same way,” Johnson said.

Under the proposal, social media platforms would pay 50 cents for every active user per month. The first 100,000 users would be exempt. City officials estimate the tax would generate $31 million annually to fund expanded crisis response and city-run mental health clinics.

The plan, however, is already facing skepticism, both from City Council and legal experts.

“You’ve admitted that we would be the first in the nation to do this. How confident are we of the city’s legal standing to levy that tax?” Ald. Brendan Reilly (42nd Ward) asked the city’s budget director during a council hearing Tuesday.

“In our discussions with the Department of Law, they feel we have a strong case that through the amusement tax, this is a tax we can levy on social media companies,” budget director Annette Guzman said.

But legal experts say the tax would not hold up in court.

“On its face, frankly it’s unconstitutional,” said Amy Bos, Vice President of Government Affairs at the trade association NetChoice, whose members include Meta and Snapchat.

Bos pointed to a 1983 Supreme Court ruling that she says supports that view.

“The court ruled you cannot single out media for special tax treatment, and that’s what Chicago is doing here,” Bos said. “The city can tax businesses broadly, but the moment they pick out specific media companies, it becomes constitutionally suspect. They’re going to have to find this money from somewhere else because it simply won’t survive the inevitable legal challenge.”

But Johnson defended his proposal, saying this is just modernizing the amusement tax.

“The amusement tax already exists, and so I would not put something forward if I didn’t think we had the ability to stand the test of any challenge,” he said.

If approved as part of the mayor’s budget, the social media tax would take effect Jan. 1.

“This shows that Chicago, as always, is a leader,” Guzman said.