Medallions outmoded, but taxis have to buy them; ride-sharing firms don't
Ride-sharing has become so dominant in some cities that locations such as the State of Massachusetts and the City of Austin, Texas, are taxing Lyft and Uber rides to subsidize the struggline taxi industry. Critics say that forces innovators to subsidize losers, but in my view, the taxi industry is forced to pay municipalities huge sums for the medallions that give them the right to operate a service. Lyft and Uber have no such tax on their operations. In Boston, the value of a medallion has dropped from $700,000 to less than $200,000, so the state imposes a 20-cent tax on each ride, with 5 cents going to the taxi companies. It may not be a great idea. I'm not sure it levels the playing field. But it addresses how part of innovator's success can be based on avoiding taxes. Amazon.com for years avoided state sales taxes that book stores paid. And we know what happened to the bookstores.