NetChoice Sues Illinois Over Digital, Social Media Taxes

NetChoice, a technology industry trade group, sued Illinois in Cook County Circuit Court to block newly enacted taxes on social-media platforms and digital advertising. The state’s social-media measure would charge major platforms based on their Illinois user counts, while the digital-ad tax imposes a 10% levy on gross receipts; together, the measures are intended to raise substantial new revenue. NetChoice argues that the laws violate the First Amendment by singling out digital speakers and services for unfavorable tax treatment and conflict with the federal Permanent Internet Tax Freedom Act, which bars discriminatory taxes on electronic commerce. The group also contends that the taxes improperly distinguish online services from comparable offline organizations and advertising. Illinois supporters have defended the measures as a way for profitable platforms to help address social and public-health costs associated with social media, while lawmakers have proposed repealing both provisions. The litigation follows a separate NetChoice challenge to Chicago’s per-user social-media tax.