Chicago Proposes First-in-Nation Social Media ‘SMART Tax’

Chicago Mayor Brandon Johnson has introduced a new tax proposal targeting major social media companies as part of his effort to address the city’s growing budget deficit. The plan, called the Social Media Amusement & Responsibility Tax (SMART tax), would levy a 50-cent per user, per month fee on platforms such as Facebook and X.

Johnson said the measure is projected to generate $31 million annually, which would be dedicated to expanding mental health services across the city.

“For far too long, we have allowed social media companies to collect our data and sell it for profit. They’ve implemented more and more aggressive strategies to get Chicagoans addicted to their apps,” Johnson said in a statement. “As a result, we have seen significantly higher trends of depression, anxiety, and mental illness – especially in our young people. This has become a serious public health issue… And just like we tax other addictive vices that are bad for our health, like nicotine and tobacco, it is far past time we treat social media companies the same way.”

The mayor described the tax as the first of its kind in the nation, adding that revenue would support the city’s free mental health clinics and crisis response teams.

Legal Concerns Surrounding the Proposal

Legal experts have raised doubts about whether the SMART tax could survive a court challenge. Recent U.S. Supreme Court rulings have reinforced First Amendment protections for social media platforms, recognizing them as having editorial discretion similar to news outlets. Additionally, federal law — the Permanent Internet Tax Freedom Act of 2016 — prohibits discriminatory taxation on electronic commerce.

Other attempts to impose special taxes on digital platforms have faced setbacks. Maryland’s digital advertising tax, for example, was struck down in court.

Economic and Fiscal Context

Chicago residents already face one of the highest combined sales tax rates in the country at 10.50 percent, surpassing major cities like Seattle. Illinois also ranks among the states with the highest property taxes nationwide.

Local policy organizations report that Chicago’s business climate has declined for nearly two years, raising concerns that another targeted tax could further strain the city’s economic competitiveness.

Johnson has previously pushed for increased corporate employee head taxes, but those proposals were rejected by city officials. Critics argue that while the administration continues to pursue new revenue streams, there has been little emphasis on reducing municipal spending as an alternative approach to stabilizing city finances.