Netflix tax to replaced Arts Tax?

By Dr. Eric Fruits
Originally found on Eric Fruits Substack,

Portland City Council President Jamie Dunphy wants to “rightsize” the city’s “perennially loathed” Arts Tax by scrapping it for some residents, raising it for others, and adding a new tax on streaming services like Netflix, Spotify, and Disney+ (Portland Council President Wants to Reshape City’s Detested Arts Tax—And Impose a New, Separate One, Mar. 4, 2026). The new revenue would subsidize live entertainment in the city.

Dunphy points to Chicago’s decade-old streaming tax as the model. Before Portland goes down that road, residents should understand what the Chicago model actually costs households—and whether the tax would accomplish what Dunphy says it will.

Chicago taxes paid streaming services at 10.25%. A back-of-the-envelope estimate suggests Dunphy’s $10 million annual revenue target would require a Portland rate of roughly 5%—effectively a sales tax on streaming subscriptions.

Most households don’t subscribe to just one service. Deloitte’s 2025 Digital Media Trends report finds that the average American household pays about $69 per month for four streaming services. Parks Associates estimates six services cost about $109 monthly. Sports fans, parents with young children, and viewers following premium series often subscribe to several platforms because the content they want is spread across them.

A percentage-based tax applies across every subscription. At a 5% rate, the average household would be paying $41-65 a year. And that would come on top of Dunphy’s proposal to increase the annual Arts Tax from $35 per adult to $50.

Rather than replacing the despised Arts Tax, the proposal effectively doubles down on it—more than doubling arts-related taxes for many Portlanders.

That creates a particular burden for households that already cut cable to save money. Streaming is the lower-cost alternative to cable, movie theaters, and live events. Taxing it to subsidize performances many residents cannot afford shifts money from a low-cost entertainment option to a higher-cost one.

Higher-income households tend to subscribe to more services and would pay more tax, but they are also far less likely to cancel subscriptions when prices rise. Deloitte found that 60% of streaming subscribers say they would cancel a service if its price rose by just $5 per month. The households most likely to cancel—and lose access to content—are the price-sensitive households the tax burdens most.

Dunphy says the goal is to “get people out from in front of Netflix and out into the community” by making streaming more expensive. That assumes taxing streaming will push people toward theater or concert tickets.

But consumers have another option: free streaming. YouTube—the largest streaming platform in the United States by viewing time—is free and would not be taxed. Neither are Tubi, The Roku Channel, and many other ad-supported services.

When a paid subscription gets more expensive, the typical response is to cancel it and switch to a free alternative—not to buy $20-plus tickets to a live show. A streaming tax won’t drive audiences to theaters when free entertainment is one click away.

Research on music streaming and concerts also points the other direction: streaming often increases concert attendance by helping fans discover artists they later pay to see live. Taxing streaming could reduce that exposure and hurt ticket sales.

Portland residents are already among the most heavily taxed in the country. Adding a new tax on top of an unpopular one—especially a tax that falls hardest on price-sensitive households and pushes viewers toward free alternatives—will not revive the arts. It will simply make Portland’s tax system more complicated, more regressive, and even less popular than the Arts Tax it was supposed to fix.

— Originally found on Eric Fruits Substack,