Kansas City Star Worried over “Bullying” from Uber, Lyft

The Missouri legislature is currently considering statewide regulation for ridesharing companies, like Uber and Lyft, which would pre-empt local regulations in cities like Saint Louis and Kansas City. Most states now have these state regulations, including all of Missouri’s neighbors save Iowa. But for some local policymakers, and media outlets like the Kansas City Star, these regulations are bullying from Uber and Lyft that rob cities of tax revenue. These criticisms miss the mark entirely.

Let’s consider the charge of bullying. Companies like Uber and Lyft have bargained hard with local regulators, trying to get rules changed to fit their business model. But let’s not forget how for-hire vehicles were regulated in Kansas City and St. Louis before these companies came along. Regulatory bodies (often representing existing taxi companies) capped the supply of cabs, fixed pricing, limited business practices, and stifled innovation. When Uber and Lyft tried to enter these markets a couple of years ago, regulators and taxi representatives fought over every inch of regulation, and the fight continues in Saint Louis. That foot-dragging is what prompted efforts to regulate these companies at the state (rather than the local) level. So who are the bullies? The regulators who micromanaged the entire taxi market for generations, or Uber and Lyft?

Now let’s talk about tax revenue. Under the current regulations, ridesharing drivers would not have to pay local earnings taxes in Kansas City and Saint Louis simply for picking up passengers there. According to one Kanas City Star author, Uber will be using city streets but not paying for them. First of all, provisions in these bills don’t specifically target the earnings tax; they prohibit municipalities from charging any kind of special tax on ridesharing companies, which happens. And second, the idea that streets would be starved of funding because of earnings-tax losses just isn’t credible. Kansas City has long treated street maintenance as the red-headed stepchild of the budget-making process, with only 3% of the city’s funding going to streets. In fact, in the upcoming budget, the tax-incentive budget is equivalent to the streets’ capital budget. When we consider that this includes both federal and state fuel tax support, and that many Uber and Lyft drivers are Kansas City residents who pay other taxes, the idea that we need to kill regulatory reform to give Kansas City a larger cut seems a bit much. Any increased tax revenue would be more likely to go the Kansas City Area Transportation Authority than to streets.

Companies like Uber and Lyft are pushing for long-overdue reform in cities across the country. And unlike their opponents, they aren’t seeking to outlaw their competition—only to run their businesses their way. They only have political clout because residents in Missouri see the great benefit of these services and want to use them. If newspaper columnists or policymakers don’t like Uber’s business model, they don’t have to drive for Uber and they don’t have to ride Uber. But they shouldn’t be allowed to make that decision for the rest of us, or empower those who would.