‘Hamilton Tax’ Levied on Large-Scale Chicago Shows and Concerts

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By Michael J. Bologna

Chicago Mayor Rahm Emanuel (D) is proposing adjustments to the city’s amusement tax to capture more revenue from large-scale theater productions and concerts, while exempting a broader group of small and medium-size entertainment venues.

Under a fiscal year 2018 budget proposal some are calling the “Hamilton tax”—dubbed after the blockbuster Broadway musical “Hamilton"—Emanuel announced plans Oct. 12 to bump the amusement tax rate on tickets sold for large-venue music, theater, and cultural events from 5 percent to 9 percent. Simultaneously, the budget proposal expands the number of entertainment venues that qualify for amusement tax exemptions, providing tax relief on events at small- and medium-sized theaters and concert halls.

The amusement tax swap is expected to bring an additional $15.8 million into city coffers.

“Chicago’s neighborhoods are filled with community theater groups and live music venues. They are part of the fabric of our communities, and a part of what makes Chicago so unique,” the mayor said in a statement. “I don’t think we should stifle the culture of our neighborhoods by taxing Thalia Hall in Pilsen or the Metro in Lakeview at the same rate we’re taxing a 40,000 seat concert venue.”

Eliminates Two-Tier Regime

Chicago currently operates a two-tier amusement tax regime with rates linked to the type of amusement and the size of the venue. Tickets for live theater, music, and cultural performances at venues with more than 750 seats are subject to a 5 percent amusement tax. No tax is charged on tickets sold for venues with 750 or fewer seats.

All other types of amusements are subject to a 9 percent amusement tax against the ticket price, including non-live performances, sporting events, movies, and bowling.

Emanuel’s proposal would eliminate the 5 percent rate entirely. The plan then doubles the venue capacity at which the 9 percent tax is applied. Under this provision, no tax would be applied on events at venues with 1,500 or fewer seats, but the 9 percent rate would be imposed on large concert halls and Broadway-scale theaters.

The mayor’s Office of Budget and Management said the change would remove 30 theaters and concert halls from the reach of the amusement tax. Fifteen venues would have to collect the amusement tax at the 9 percent rate.

The budget office estimated the 5 percent amusement tax will raise $24.5 million during fiscal year 2017 and then be zeroed out for fiscal year 2018 under Emanuel’s plan. The 9 percent tax is expected to bring the city $141.5 million in fiscal year 2017, but $181.8 million next year. The two revisions to the tax program would leave the city with a net revenue increase of $15.8 million.

To contact the reporter on this story: Michael J. Bologna in Chicago at mbologna@bna.com

To contact the editor responsible for this story: Jennifer McLoughlin at jmcloughlin@bna.com

For More Information

More information on the proposal is at http://src.bna.com/tml.

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