This article was published by The McAlvany Intelligence Advisor on Wednesday, August 24, 2016:
One has to give Massachusetts Governor Charlie Baker credit: he has devised a plan to punish ride-sharing newcomers, save the state's failing taxi cartel, and fund much-needed “infrastructure improvements,” all with free money: a new tax on ride-sharing customers that won't be paid by either the driver or his customers. Instead, it will be levied on those evil newcomers – Uber, Lyft, and the like – who dared to innovate and take business away from the existing cartel.
Here's how it works: a new tax of $.20 will be levied on every ride provided by a ride-sharing service in the state – an estimated 2 ½ million of them every year – and a nickel will be transferred by the state's MassDevelopment agency to the Big Taxi cartel. That nickel will be used to allow it to “adopt new technologies” (presumably phone apps) to compete more effectively with the newcomers. The rest will be used to fund various government projects.
Free-market adherents have tried to characterize the new law as “robbing Peter to pay Paul” or a Robin Hood tax: taking from the rich and giving to the poor. But these fail to describe what's really going on: It's a broad daylight robbery: taking from those who earned it and giving – some of it anyway – to those who didn't.
It's all fair, legal, and just in Massachusetts. The head of the Boston branch of the taxi cartel, Larry Meister, the manager of the Independent Taxi Operator's Association, considers the new tax as punishment for the newcomers: “They [the new cost-saving ride services] have been breaking the laws that are on the books, that we've been following for many years.” Besides, added Meister, “We definitely need some infrastructure changes.”
Cheryl Chumley, author of The Devil in DC: Winning Back the Country from the Beast in washington, said the new law was sold as a way to help taxi services identify and put in place “new technologies and advanced service, safety, and operational capabilities” [quoting from the new law], all things which competition would have, and should have, forced those taxi services to do long ago.
It's called socialism, writes Chumley:
Only a socialist – someone who thinks the government should oversee and control business and the economy – could applaud a tax that takes money from a private [successful] enterprise and siphons it into the hands of another private [but failing] enterprise.
It's particularly galling, though, when the money being taken from the private business is being used to bolster the bottom line of a competing business – and then sold as a “safety” benefit for all.
Robby Soave, writing for Reason.com, calls the new law “economic idiocy, plain and simple. There's just no good reason for the government to prop up firms that can't [compete] in the marketplace on their own.” Michael Farren, a research fellow with the Mercatus Center at George Mason University, wrote that the new Massachusetts law is “quite literally the textbook example of how laws can restrict competition and grant monopoly-like power to existing companies.”
frederic bastiat called it “legal plunder”:
But how is this legal plunder to be identified? Quite simply. See if the new law takes from some persons what belongs to them and gives it to other persons to whom it does not belong.
See if the law benefits one citizen at the expense of another by doing what the citizen himself cannot do without committing a crime.
But it's legal plunder with a twist: It'll be levied on ride-sharing customers outside the state! None of those ride-sharing companies owns a currency printing press to pay the new tax – estimated to be $5 million every year – and so they will be forced to raise the money from its existing customers residing outside the state.
How beautiful is that? The governor has managed to inflict a tax that not only punishes the newcomers, resurrects the failing cartel, funds various government “improvements,” but is paid for by people living outside his state!
It is a daylight robbery, all right. Just not on those living in Massachusetts.
Reason.com: Massachusetts Will Tax Uber to Subsidize Taxi Industry. That's Absurd.
Cheryl Chumley: Massachusetts Uber Tax Sheds Light on the Socialist Mindset
Reuters.com: Massachusetts to tax ride-hailing apps, give the money to taxis
Michael Farren: Transportation Taxation Without Representation