Hey, Uber, Over Here! Over Here!

Dara Khosrowshahi. Photo credit: Fortune

So, Uber decides to use Washington, D.C., as a test bed for its vision for urban mobility. CEO Dara Khosrowshahi visited Washington Wednesday to publicize company plans to expand its ride-hailing app so customers can access and pay for bike share, car rentals from private car owners, and eventually mass transit.

And what does Washington do? Mayor Muriel E. Bowser has proposed increasing the gross receipt tax on ride-hailing companies from 1% to 4.75%. The tax revenue would pay for about 10% of Washington’s $178.5 million share of increased funding for Washington Metro. (Virginia and Maryland and providing the balance — without taxing Uber.)

Interesting economic development strategy Bowser has there: Tax businesses in the growing innovation economy to subsidize enterprises in the stagnant, money-losing old economy.

Uber’s idea is potentially so transformative that slapping $18 million added tax on the ride-hailing industry may not prove debilitating. (Not for Uber anyway. I’m less sanguine about its weaker competitors.) But one thing we can say for sure: The tax will not accelerate Washington’s evolution toward the transportation future.

“What we want to make sure is that you’re not taxing one form of shared transportation for another form of shared transportation,” Khowrowshahi said in a public meeting with Bowser, reports the Washington Post. “We’re in this to promote shared transportation in general. We want to make sure that proposals like this are not unconstructive to that goal.”

City officials, notes the Post, say the ride-hailing services have benefited from Metro’s problems so it’s only fair that they be part of the solution.

 

 

Bacon’s bottom line: Hey, Uber, come look at Virginia — we won’t tax you!

Your one-stop-transportation-shopping app sounds like a fantastic idea. I can hardly wait until you develop AI that allows people to map multimodal trips integrating everything from walking and biking to gypsy vans and buses to hour-long car rentals. I’m eagerly waiting for a full range of transportation services at varying levels of convenience, comfort and price. If you put a few money-losing public mass-transit enterprises out of business, I won’t have a problem with that. I’d love to put an end to the drain on taxpayers. Likewise, if you force public enterprises to adapt by cutting costs and becoming more responsive to customers, I’m totally cool with that, too!

I regard Bowser’s logic — Uber is part of Metro’s problem, therefore you should be taxed to help fix it — as wildly illogical. You should be allowed to compete on a level playing field with all other transportation business models. I hope you understand, however, that does include paying your fair share of the cost of maintaining and building the road and highway infrastructure that you rely upon. Who knows, you might end up paying more in taxes that way. But at least you wouldn’t be subsidizing the competition.

One more thing, Virginia has localities that would love to cooperate with you. Take Virginia Beach. The resort city has plans for development of its waterfront that include a drop-off zone for ride-hailing services. How cool is that? If cities can provide drop-off zones for buses — typically referred to as bus stops — why not drop-off zones for ride-hailing services? That’s something that municipalities can do at next-to-no cost.

Here in Virginia, we want to accelerate the development of a 21st century model for transportation, not tax it. Use us as a test bed. Please!

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18 responses to “Hey, Uber, Over Here! Over Here!

  1. Simple answer – WMATA has a public sector labor union. Public sector labor unions make big campaign contributions to Democrats. Democrats run Washington’s municipal government. Washington’s municipal government taxes WMATA’s competitors to benefit the public sector labor unions.

    • If you want to know how financially irresponsible and arrogant these people within the Washington Metropolitan Area Transit Authority (WMATA) are, then you should consider this:

      The retail, residential and commercial real estate around the intersection of Wisconsin & Western Avenue at the boundary line that separates Northwest DC from Maryland has long been among the very most valuable in the United States for high rise residential, office, hotels and regional shopping.

      Why?

      This remarkable urban intersection serves major commuter traffic in and out of the Nations Capital, and within one of the nation’s richest locales. Local residents within several miles in all directions of this intersection live in the densest large population of affluent Americans in the entire nation. Its residents rank within the top .oo5% of all wage earners in America. Plus this intersection enjoys extraordinary access in all directions to outlying areas, whether by bus, subway, or major roads, enjoying unparalleled local and regional traffic of all sorts, going for work, to shop, or for entertainment.

      Hence, this intersection should be one of the busiest subway stops in the world. And it was so constructed. It has 5 escalator served access points that span 6 city blocks of the richest retail in America, two in Maryland, 3 in Washington DC . This costly and mammoth subway stop should be among the most profitable anywhere, yet it is one one of many of DC metro’s poor performers.

      Why?

      Beyond obvious woefully incompetent zoning enforcement in DC, the Washington Metropolitan Area Transit Authority (WMATA) refuses to move its sprawling bus repair facility that occupies and pollutes most of an entire city block in DC atop what otherwise would be the most accessible of the subways main entrances, while the balance of the access points are also poorly designed, limiting their access.

      Who else but the the Washington Metropolitan Area Transit Authority (WMATA) would operate a bus repair shop atop one of the most valuable blocks of real estate in America. Think of the many ways this irresponsible corporate conduct harms the public welfare, and wastes the public’s money.

      It throttles every day the profit the subway would otherwise realize out of one of the most valuable subway stops in America.

      This obscene abuse of resources and irresponsible use of property soils and devalues the fabric, function, and proper use of an entire commercial and residential neighborhood, it’s profitability and use by renters, owners, shopper.

      The Washington Metropolitan Area Transit Authority (WMATA) represents local government and local public service at its absolute worst. Why in the world would anyone ever give this crew more hard earned public money?

      • Why, at a absolute minimum, should not the Washington Metropolitan Area Transit Authority (WMATA) be forced to sell that bus repair site on Wisconsin Ave in NW DC to the highest bidder before it qualifies for any more public funding using taxpayer dollars? Why not?

  2. I think there may be a serious question as to the long term sustainability of municipal-provisioned transit. That’s not the
    same as saying that METRO -type trains and buses will go away.

    And I don’t think it will happen overnight and I don’t think it will happen without a lot of back and forth.

    But what will accelerate it – is – an approach to providing some level of subsidies for the lower income – which is in some respects a key justification for METRO-like buses and trains.

    Once you take care of the lower-income transportation needs – it seems obvious you’d want to fully unleash Uber and other private sector enterprises to do their thing.

    That is – with one , more , gigantic proviso and that is who pays from transportation infrastructure – and how?

    Uber is using publicly-provisioned transportation infrastructure. Are the gas taxes that they pay – sufficient to pay for their use – especially if they start using more and more fuel efficient vehicles including electric?

    • The Transportation Planning Board for the National Capital Region has a measurement of the number of people whose commute to work via car or transit takes more than 50 minutes. Many of these people reside in D.C. across the Anacostia River and in Prince Georges County. I think it would be in the public interest to measure how the number of people so effected could be reduced as a measurement of transportation equity. Not the only decision-making factor, but one that should be considered.

      I also agree that, over time, non-rail transit as we know it today will change radically. Bus service except on major routes or with small buses will go away or should go away.

  3. I don’t see METRO or buses going away. If Uber can string a bunch of trips together for a Van or other multi-passenger vehicle – why not ANYONE who operates such vehicles?

    For that matter – what keeps TAXI’s from doing what Uber is doing ? All it takes is the same computer /cell phone infrastructure.. right?

    So then you get to … why should govt do it if the private sector can do it? Why not let the private sector bring more efficiency to transit and transportation – as long as the lower income are held harmless?

    Right now – down in Hampton Roads – lower income can get reduced tolls on the tunnels… other places are providing transit cards for lower cost to the lower income..

    But the bigger question is – is Uber gobbling up – publicly funded transportation infrastructure?

  4. This is the same economic stupidity that threatens the menhaden in Virginia. A lot more people are employed in sport fishing charters, bait shops, commercial rockfishing boats, etc than are employed by Omega Protein in Virginia (who employs about 300 as I recall). So, you’d think that Virginia legislators would say, “Hey, a bountiful supply of menhaden provides for enhanced employment in all the businesses that revolve around catching the predators which eat the menhaden. We’ll join the rest of the East Coast states and ban (or severely limit) commercial menhaden fishing.” But of course that doesn’t happen. Why? Because Omega Protein is well organized as a single company and has plenty of payola to spread around the state’s politicians. The one man commercial fishing operations, isolated bait stores and others are not well organized so they never build up enough cash to shower the decision makers in Richmond.

    In DC I guarantee you the cab companies, WMATA, etc are well organized. When they see a chance to poke a competitor in the eye via the political establishment, they take that chance. What Uber needs to do is organize its drivers for political action. Make sure they all know what Mayor McCheese is planning. Have them send letters to the mayor letting her know what they think of her plans and how that will affect their vote.

    Will the mayor listen? Probably so. You see, DC is less corrupt that Virginia. Realistically, pretty much everywhere is less corrupt than Virginia but recent events in DC illustrate the matter. The DC Council recently unanimously approved a new law that will dramatically lower the maximum campaign contribution that people can make to candidates. In return, DC will match every $1 donated with $5 from the city coffers. In addition, there will be no donations allowed from businesses! Suddenly, all those Uber drivers making small contributions will have a real impact (assuming Uber organizes them). Right now, a person or business can contribute $2,000 per election to the mayoral candidate and $5,000 to a PAC. There are 7,500 cabs in DC with the largest cab company having 600. For the sake of argument, let’s guess there are 100 significant cab companies in DC. 100 X $2,000 = $200,000. That’s a pretty big pot o’ dollars for the mayor in the next election. After the new regulation takes effect those companies will not be able to donate anything and their owners and executives will be limited to same low maximum as everybody else.

    Unsurprisingly, her honor the mayor opposes the new law. Unfortunately for the mayor her veto can be over-ridden by a 2/3 vote of the council and the council passed the act by a 3/3 vote.

    A lot would change in Virginia if corporations could not make political contributions and personal donations were limited to a low maximum. For one thing, there’d be a whole lot more menhaden in the bay.

    Time to replace “Virginia is for lovers” with “Virginia: Now more corrupt than even DC”

    https://www.washingtontimes.com/news/2018/jan/9/dc-council-unanimously-passes-campaign-finance-ref/

  5. What happens if Uber gets the kinks out of autonomous and it’s no longer about Uber drivers but the Uber Monolith?

  6. Jim, what makes you think Virginia (at the state or local level) is less eager and less likely to tax that activity? Arlington, Alexandria, Fairfax – not on the Chamber of Commerce honor roll for pro-business tax policies. (Speaking metaphorically, as there is no such published list.)

    • Well, no one has raised taxes on Uber yet — that gives me hope.

      But your point is well taken. Maybe no one had thought to raise taxes on Uber. Now that D.C. has paved the way, maybe someone will go, “Hey, that’s a good idea.”

  7. In a huge way – Uber is illustrating what technology is doing to jobs – first the lower skilled, then up the ladder now with AI.

    Those who celebrate the advent of technology to lower prices for products/services primarily through lowering costs of labor may not also see how fewer and fewer jobs are available for those with minimal educations – AND – if those folks ultimately become welfare burdens to other taxpayers.

    If Uber kills taxis and govt-provisioned transit , then autonomous technology kills Uber drivers themselves – what will all those folks that used to be drivers do for a living?

    One less noticed aspect of just Uber taking over transportation and transit with Drivers was the KIND of employees. Govt transit employees have FICA taxes deducted from their pay whereas Uber drivers are most often independent contractors who don’t have FICA deducted but instead – owe it as a lump sum at tax time. Govt transit drivers usually have employer-provided health care and Uber drivers not. Transit drivers, some form of retirement, Uber drivers not.

    And even the Uber drivers might eventually go away altogether with “ex” govt and uber drivers – unemployed altogether, lacking health insurance and retirement funds.

    Finally, consider that most States including Virginia as well as the Federal Govt wants to make MedicAid contingent on the recipient working but in the evolving 21st century – how many jobs will actually exist for folks with minimal educations if automation is taking more and more of those jobs ?

    • How many jobs will actually exist for folks with minimal educations if automation is taking more and more of those jobs?

      I don’t know. But in the real world, the one we live in, the American Trucking Association was predicting a shortage of 50,000 truck drivers nationally by the end of 2017.

      And as Reason’s Hit & Run blog pointed out, the trucking jobs most susceptible to automation — long-haul trucking jobs — are the ones that are hardest to fill. Short-haul jobs, which typically require drivers to load, unload, and interact with customers, are much more difficult to automate.

      If Uber automates its ride-hailing vehicles, I’m not concerned. Automation will lead to much cheaper transportation, which will put money back in the pockets of consumers, who will spend the money on something else, which will create a demand for jobs somewhere else.

      • Re: demand for other… But those other jobs will not be for minimally educated labor and even ones that do exist – like Uber will not be providing health care and retirement benefits and the question is who will pay for their health care and retirement ?

        Will our system evolve to other industrialized nation’s models or 3rd world models or as yet, some undefined hybrid? What countries today would be most like where we might be evolving?

        • After 38 years of working in the technology industry I think Larry is exactly right. Someday society will evolve to operate in a world where a very large percentage of the people never hold a job. However, between now and then there will be chaos. Our political class is self-serving and corrupt. There’s no way that they will stop doing what’s best for themselves and start doing what’s best for society. At least, there’s no way they will make that change before all of society goes through a truly hellish transformation.

          • I’m not advocating anything in particular of “basic income” or similar but we’re moving away from a system where people pay FICA taxes and can afford health insurance if the employer does not provide it and what are we going to do if we have more and more folks in their 50, 60s, 70s who need health care and at the same time have no retirement income to pay for their shelter and food?

            From the right – the answer seems to be – “people need to be responsible… and we need to stop having taxpayers pay entitlements for folks who failed to be responsible for their own affairs”.

            More than a few on the right – advocate for getting rid of Social Security and Medicare (most entitlements) altogether – but that’s essentially what is going to happen to the lower skilled anyhow if they no longer can compete for jobs in the 21st century economy or the ones they do qualify for don’t provide health care and don’t collect FICA taxes.

            I just don’t know any first world countries that do that. The only ones I know are all 3rd world or developing world.

            We continue to have folks in this country – who reject the industrialized countries policies and want this country to go back to the way it used to be prior to when we had Social Security and Medicare.

            There are LOTS of countries today like that – probably the vast majority of countries on the planet with only a small number 30-40 who are, in the words of some “welfare states”.

            I understand the philosophy, don’t agree with it – and wonder whether the majority of Americans really agree with it. Used to think “no” but who knows these days!

  8. To illustrate the evolution to robots and automation for lower tier jobs… look at the picture below where the truck has an arm to grab the trash can and empty it in the truck.

    But note there are drivers in that truck.

    The next evolution of trash trucks will undoubtedly be autonomous and those trucks will likely be running longer than 8 hour shifts.

    So what happens to the drivers in terms of their next jobs when that truck is replaced with an autonomous model? What other jobs in the economy that only require minimal education will actually still exist?

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