Robbing Peter to Pay Paul
Remember those old movies where the fat, bloated villain forces the industrious hero to dig his own grave? This is an image which causes many to shiver, why would a person do something that, contributing to their own demise? Would it not be better to be killed than to help your oppressor dispose of you after you are gone? Yet throughout our society, we see this happen time and time again as our individual liberties are stripped away from us by a government that is replacing our rights with theirs.
When this happens, we look the other way, as if this is normal for a government to victimize its citizens, and there is nothing that we can do about it. However, each time that this happens, the people can fight back through the courts and through peaceful methods to ensure that our rights are protected. We are lucky that the rule of law still hold sway here. Today we look at the passing of a simple tax in the Seattle area.
On November 25th, 2019, the Seattle Times reported that the city council of Seattle had passed a $0.57 tax on Uber and Lyft rides. The Seattle Times article looks specifically on the effect that the new tax has on the drivers and the company. Both of whom are faced with difficult decisions in their own right. However, it fails to address the concerns of people who are actually paying the tax, the people using the ride-sharing services.
Seattle’s draconian tax is punishing the people who are trying to be greener, while the groups in power argue over how to spend the spoils. The first voice in the choir of corruption is the city of Seattle itself. Seattle is planning on using the funding from the tax to pay for more low-income housing, and an oft-delayed streetcar project, looking at 1920s solutions for modern problems. This use of funds is self-defeating as it fails to enhance the livelihood of all Seattle residents.
It chooses only to focus on a few in the waning welfare class whom the cities leadership relies on for re-election. Tract housing has been shown to be devastating to the poor, specifically minority communities. Further, the concentration of poverty in certain areas of the city lowers crimes in affluent areas, while doubling or tripling crime in others. You see a up to a 30-fold increase in the newly-poor areas.
Groups such as Habitat for Humanity have noted that while affordable home ownership has immense benefits for impoverished neighborhoods. public housing perpetuates a system of wealth diminishment. It is found that the children of parents who own, not rent, their homes are “59 percent more likely to become homeowners themselves, starting an upward spiral.” The trick is to involve people to make it happen.
Old Options, New Regulations, Higher Costs
Public streetcars are another ill-conceived use of the limited funds that will be generated by the ride-sharing tax. Streetcars are nostalgic throwbacks to the 1920s, a technology that has been replaced with subways, monorails, elevated trains and bus systems. The key problem of streetcars is that once a route is set, it is set until it is decommissioned. This is one of the reasons that buses have been preferential to streetcars for decades.
A bus route can be changed as the demographics of the city changes, streetcars cannot (at least not without millions in infrastructure redesign). While monorails and subways suffer from a similar restriction, the infrastructure around subways and monorails create areas where business can flourish. This occurs as the stations becomes hubs of the local community. Streetcars do not have this as they are outdated busses on tracks.
Toronto invested in Bombardier streetcars for its city, and the process has been rife with problems. From cost over-runs to delays, the streetcars did not work out as well as promised. Cincinnati’s experiment in streetcars has likewise been plagued with issues like mismanagement and lack of ridership, according to Cinciccati.com. Many of the streetcar projects were funded during the Obama era, which led to a gratuitous waste of taxpayer money across the nation.
The second voice in the choir of complainers is the Taxi Service industry. Like the streetcar system, taxis are becoming a thing of the past. With a bloated licensing system, difficult unions and a dubious record for safety and cleanliness, taxis across the nation are dying out. Those who hold the medallions are arguing that they paid for a license, Uber and Lyft Drivers did not.
The problem with this argument is that as long as Uber and Lyft have a valid business license and have their drivers contracted, they also have a license. This tax was a small concession to the dying field of taxis, but it was a concession none-the-less. It is not enough to keep the taxis afloat though. They demand more and more, effectively becoming a government-subsidized, for-private-profit transportation system.
Finally, we have the third voice in the choir, the entitled Uber Drivers of Seattle. While there is no real reason to oppose the side-hustle of thousands of drivers with good driving records, the argument that they should be paid $16 an hour (because it is the minimum wage) is silly. Uber and Lyft drivers are independent contractors, which means that they are paying themselves . The government forcing Uber and Lyft to pay contractors a set rate is a gross constitutional violation and should be struck down before it even starts.
The victims in this matter are the unsung workers, entrepreneurs and poor who use the ride sharing app as a way to get around the expense of owning a vehicle. Whether their choice is that they are trying to be green, or whether it is economic, the choice to have less cars on the street helps with Seattle’s overcrowding problem. These people should not be punished just because the city sees a way to make money off of those who will complain the least. The city could institute a pornography tax (which would generate millions), an increased sin tax on alcohol or cigarettes (also could generate millions), a higher fuel tax for Uber, Lyft and Taxi drivers (once again can generate millions), or a simple but small tax on coffee. Any of these would generate more money than the Uber/Lyft tax.
Overall, Seattle is effectively forcing those who use Uber and Lyft to dig their own grave. While the executives at Uber have seen the writing on the wall, and are arguing for a toll rather than a direct tax. This would limit the effect on the industry in several ways. Unsurprisingly, the city unanimously has passed the draconian tax.
With each ride, the ride-sharing community is removing a shovel full of dirt out of their graves. Seattle is not killing the community with this tax. The City is the villain, allowing the Hero (the people) to kill themselves. For some reason people go along and just grumble. Luckily for the City, the ride-sharing community will be in its own grave when it dies.
Dr. Christopher Smithmyer is a writer for NRN, the Vice President of International Affairs at Brav Online Conflict Management, and an Adjunct Professor of MBA Business at Doane University. He is also part of the founding team at BlackWalletLTD, one of the leaders in stable coin 2.0 ecosystem maintenance. Dr. Smithmyer’s focus is international business and finance, along with reviews of board games, weapons platforms, and survival items.