Labor Secretary Marty Walsh today said that most gig workers in the United States should be classified as “employees,” not independent contractors.  

“… In a lot of cases gig workers should be classified as employees... in some cases they are treated respectfully and in some cases they are not and I think it has to be consistent across the board,” Walsh told Reuters. 

Reclassifying gig workers in this way would be devastating to independent contractors, as many would lose work.  

Further, neither rideshare drivers themselves nor the American people consider drivers to be employees. Even more damning, most rideshare drivers don’t want to be employees.  

By a 3-1 ratio, Americans consider rideshare drivers to be independent contractors and not employees, according to a landmark Pew Research Center survey.

Pew Research Center conducted a sizable survey of 4,787 American adults and found that most Americans who were aware of the regulatory debate surrounding these areas of the economy do not consider rideshare drivers to be employees, and believe the government should use a light regulatory touch in this area of the economy. 

As noted by Pew, most rideshare users do not consider drivers to be employees. In fact, “66% of ride-hailing users think of the drivers who work for these services as independent contractors, while 23% view them as employees of the app or service.” 

As noted by Pew, "the clear preference for a light regulatory approach among partisans in all camps is striking." 

Similarly, most users consider these to be companies software companies as opposed to transportation companies.

Here is the Pew Research graph that shows these two results:

 

An Edelman Intelligence survey found that the freedom to be an independent contractor is vital to rideshare and food delivery drivers, as nine out of ten drivers on app-based platforms "began driving because they needed a job where they could control their work hours." About 72 percent of drivers supported California Proposition 22, affirming their right to be an independent contractor, not an employee. 

Democratic-leaning Benenson Strategy Group and Republican-leaning GS Strategy Group conducted a survey which found that 77 percent of Drivers say flexibility is more important than receiving benefits. In other words, Drivers prefer flexibility over the benefits of employment by a margin of more than 3-to-1. 

It is clear that drivers prefer to keep independent contractor status, therefore maintaining their independence and flexible work schedule. In fact, nearly 70% of drivers would quit if they had to take on a traditional employment role with Uber. 

Rideshare services have been revolutionary when it comes to people’s access to transportation, safety, and even health. If the Biden administration is successful, rideshare services will likely become more scarce and more expensive.  

By a 5:1 ratio, residents of majority-minority neighborhoods say rideshare services like Uber and Lyft “serve neighborhoods taxis won’t visit" according to the Pew survey.

"Ride-hailing services are seen by minorities as a benefit to areas underserved by taxis," the research found. 

Over half (53%) of ride-hailing users living in majority-minority communities communicated to Pew Research Center that ride-hailing provides service to neighborhoods where traditional taxi services are scarce. Only 10% of those respondents disagreed with this statement. 

Access to transportation is vital in these areas. 

As Sara Heath of Xtelligent Healthcare Media explains, “Rideshare companies, such as Uber and Lyft, are cruising into the healthcare spotlight. As medical professionals focus on improving patient access to care and addressing the social determinants of health (SDOH), these rideshare services are a cheap and effective option for meeting industry needs… For millions of patients across the country, getting a ride to a medical appointment is a genuine challenge. Public transportation can be unreliable or unavailable, many individuals lack access to their own vehicles, and patients may not always be able to secure a ride from a friend or family member at the right time.” According to the CDC, access to transportation is one of the most significant social determinants of health. 

It is important that we protect independent contractors’ status as ICs and ensure that their work remains flexible. Both drivers’ livelihoods and users’ access to transportation is at stake. 

Americans for Tax Reform today condemned the decision by the Food and Drug Administration (FDA) to begin the process of banning menthol cigarettes. The proposal is also opposed by over two dozen of the leading civil right groups in the United States, including the American Council on Civil Liberties (ACLU), the National Black Justice Coalition, and the Law Enforcement Action Partnership, as well as the Rev. Al Sharpton.

“At a time the nation is rightly focusing on over-policing of minority communities and criminal justice reform, it beggars belief the Biden Administration wants to criminalize a product used by 12 million Americans, predominantly from minority populations” said Tim Andrews, Director of Consumer Issues at Americans for Tax Reform. “The evidence clearly demonstrates that introducing prohibition will do nothing to reduce smoking rates, but will expose minorities to further over-policing”.

Mr. Andrews also noted the evidence from other jurisdictions where menthol bans were imposed stating that “While the majority of menthol smokers will switch to non-menthol tobacco, over 20% will continue to purchase on the black market, not only exposing them to persecution, but funding sophisticated international criminal syndicates. According to the US Department of State, illicit tobacco’s links to funding terrorist organizations is already a serious threat to national security, and this would just make the problem even worse, while also depriving state governments of excise revenue putting state government programs at risk.”

Mr. Andrews concluded: “If the FDA were serious about smoking rates, they should follow the science – and not radical activists. The science is overwhelmingly clear that the best way to reduce smoking rates is by embracing reduced risk non-combustible nicotine delivery systems proven 95% safer than smoking, between two and five times more effective than any other quit smoking technique, and according to Georgetown University Medical Center, which have the potential to save 6.6 million lives. These technologies, ranging from vapor to other tobacco products, some of which the FDA already authorized to be marketed as reducing cancer risk for people who switch,  to “heat not burn” devices, have already led to the sharpest decline in smoking rates in history. Rather than reintroducing the failed polices of the past like prohibition and put some of the most vulnerable in our society at even more risk, the FDA must follow the science and embrace these life-saving technologies."

The Arizona Senate has passed civil asset forfeiture reform by a huge 29-1 vote margin. The bill already sailed through the House with 57 yes votes to only 2 nays. It is an overwhelming and deserved victory for legislation that will finally protect innocent Arizonans from having their property taken by the police.

Sponsored by Rep. Travis Grantham, House Bill 2810 requires a criminal conviction for someone to permanently lose their property. If there is no crime, it remains a dangerous standard to allow the authorities to take the property of citizens.

Last year, similar legislation looked primed to pass, but Democrats in the House killed the effort, unanimously rejecting the bill.

Under current asset forfeiture laws, Arizonans can have their property seized by law enforcement without a crime having been committed. They can also lose their property if it was used in a criminal activity without their knowledge – authorities do not have to prove the property owner knew. Combine these issues with a difficult-to-navigate process for citizens trying to get their property back, and the deck is inappropriately stacked against Arizonans.

On top of the conviction requirement, reforms in HB 2810 will address these issues through transparency and more reasonable time frames for petitioning to get one’s property back.

Despite the claims of opponents, the bill will not impede prosecutors’ ability to build a case. Anything seized that is evidence in a case can be kept by the authorities, and people who flee or allowed their property to be used in a crime lose that property just like before.

The bill heads to Governor Doug Ducey for his signature. Should the Governor sign the bill, Arizona will join 15 other states who have conviction requirements. Three states, New Mexico, Nebraska, and North Carolina ended civil asset forfeiture entirely.

President Joe Biden is proposing to create a second Death Tax by repealing step-up in basis. This will impose the capital gains tax (which Biden has proposed raising to 43.4 percent) on the unrealized gains of every asset owned by a taxpayer when they die and will be imposed in addition to the existing 40 percent Death Tax.

Repeal of step-up in basis, which has been proposed as part of Biden’s “American Families Plan,” will create new complexity for many taxpayers including family-owned businesses. It will force businesses to downsize and liquidate assets, leading to fewer jobs, lower wages, and reduced GDP. 

Repealing step-up in basis will disproportionately fall on family-owned businesses, many of which are asset rich, but cash poor. These businesses are already forced to liquidate structures, equipment, land, and other assets because of the Death Tax. Repealing step-up in basis will compound this problem and force family-owned businesses to sell a significant portion of their business or go into significant debt to pay their tax liability.

Repealing step-up in basis will create new complexity for taxpayers. Because of this tax increase, taxpayers would have to determine the cost basis of all assets owned, many of which may have been owned for decades. As noted by an Ernst and Young study, if the taxpayer is unable to provide sufficient evidence to prove the cost basis, then it may set to $0. In other words, the 43.4 percent tax would be applied to the entire value of taxpayer assets:

“Family-owned businesses may also find it difficult to comply because of problems in determining the decedent’s basis and in valuing the bequeathed assets. It seems likely that these administrative problems could lead to costly disputes between taxpayers and the IRS. Additionally, if sufficient evidence is not available to prove basis, then $0 may be used for tax purposes. This may result in an inappropriately large tax at death.”

In addition, repealing step-up in basis will harm the economy, costing jobs and wages. As noted by the Ernst and Young study, repeal of step-up basis will increase the cost of capital and discourage new investment. This negative economic impact will cost 80,000 jobs each year for the first ten years, increasing to 100,000 jobs each year thereafter.

One third of the tax will also fall on American workers in the form of lower wages. In other words, every $100 in federal revenues raised will result in $32 in lower wages by workers. Because of these negative economic effects, repeal of step-up in basis will reduce GDP by $10 billion per year.

Repealing step-up in basis has already been tried and failed. In 1976 congress eliminated stepped-up basis but it was so complicated and unworkable it was repealed in 1980 before it took effect.

As noted in a July 3, 1979 New York Times article, it was "impossibly unworkable":

“Almost immediately, however, the new law touched off a flood of complaints as unfair and impossibly unworkable. So many, in fact, that last year Congress retroactively delayed the law's effective date until 1980 while it struggled again with the issue.”

As noted by the NYT, intense voter blowback ensued:

“Not only were there protests from people who expected the tax to fall on them -- family businesses and farms, in particular -- bankers and estate lawyers also complained that the rule was a nightmare of paperwork.”

Biden’s plan to repeal step-up in basis will hit families and small businesses hard. It will harm the economy and job creation, and create new complexity in the tax code. It also has a history of failure as it was quickly repealed the last time it was tried.