Chicago Social Media Tax Likely to Spur Big Tech Legal Challenge

Tech industry attorneys are poised to challenge Chicago’s first-in-the-nation tax on social media companies, arguing that federal law preempts the novel levy.

The Social Media Amusement Tax, or SMAT, is among half a dozen new tax programs the city launched this year and will apply to companies like X Corp. and Meta Platforms Inc., the parent of Facebook and Instagram. The tax applies to any business that gathers data on more than 100,000 Chicago consumers in a calendar year, and is calculated at $0.50 per consumer in excess of 100,000 in a given calendar month.

A successful ...