Tax Uber and Lift the Veil

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For Game 6 of the Capitals’ conference finals, Uber provided funding for late-night Metro service. It may have been a coincidence that Uber’s gesture came just as the D.C. Council weighs a proposal that would require ride-hailing companies to share basic data with government agencies, and modestly increase the tax on ride-hailing services to fund public transit. Uber and its peers, Lyft and Via, oppose the bulk of the proposed policy.

The D.C. Council proposal would finally lift the veil that’s long hung over ride-hailing services by immediately providing transparency about where, when, and how many ride-hailing trips are actually conducted in the District. D.C. leaders, including Mayor Muriel Bowser, profess a commitment to “employing as many data sources as possible” and using them in ways that can “make cities safer, less congested and more efficient.”

But the current law does just the opposite. The Vehicle for Hire Innovation Amendment Act of 2014, which one Uber lobbyist described as “one of the best models for us,” prohibits policymakers, journalists, and researchers from finding out how many vehicles are on the road during a given week or how many registered ride-hailing drivers live in the District. Uber claims 1.9 million riders and 42,000 drivers in the region, but the current law makes it impossible to verify the claim.

The D.C. Council’s proposed policy would allow actual assessments of the costs and benefits of ride-hailing services in the city and would help determine whether Metro’s decline in ridership is shaped by these services. Recent research from the University of California Davis shows that ride-hailing services may be increasing traffic and pollution in cities by shifting riders to private cars and away from public transit systems. The researchers found at least half of ride-hailing trips would not have been made if ride-hailing services hadn’t existed, or would have been taken by foot, bicycle, or public transit instead.

The proposed law would also allow comprehensive studies about the effects of ride-hailing services on transportation equity.

Policymakers would finally be able to track whether ride-hailing services fall short of federal standards for disabled riders or contribute to racial inequalities. In our study of 40 Uber drivers, many reported that they avoid poorer, black neighborhoods, and, if they have to drop off a passenger in one such area, they turn off the Uber app to avoid picking up new passengers there. As one driver said, “I don’t pick up in southeast D.C. or [Prince George’s] County.”

Other drivers said that they concentrate in wealthier, white neighborhoods because Uber provides them with opportunities to earn more in those areas of the city. Uber maintains that these surges reflect demand, which may well be the case, but algorithmic pricing may worsen transportation inequities. Researchers elsewhere have found “significant evidence of racial discrimination” in ride-hailing services. People of color faced longer wait times and more frequent cancellations than white customers. In a city like D.C. that is increasingly marked by racial inequalities, data transparency about ride-hailing services in disadvantaged communities is critical.

There’s one more reason the D.C. Council should adopt these proposed changes to the regulation of ride-hailing services: data transparency could shed light on basics about the ride-hailing workforce, such as its size and average fares. Our research suggests that many drivers struggle to earn a decent wage.

Critics of the D.C. Council proposal – namely, Uber, Lyft, and Via – say they already share data. But the data often represents just a fraction of what many D.C. officials actually need. A report by the National Association of Transportation City Officials found that Uber Movement, the service that offers access to certain, anonymized data about congestion and travel patterns, offers only one of seven criteria required to improve the transportation planning process. Decisions about which, when, and how much data transit services share should not be left up to the private companies. The D.C. Council’s proposal would finally make it possible for policymakers to access the very data that they require to fulfill their responsibility to govern our roads.

The proposed tax increase on all ride-hailing services from 1% to 6% would help to fund Metro repairs and improvements. Riders would pay a $0.60 tax instead of $0.10 on a $10 ride. Last year The Washington Post lauded a flat tax plan in Chicago: “it is equitable to raise revenue from services such as Uber, which are used disproportionately by wealthier passengers, for the benefit of transit, which serves a mass clientele.” Some critics of the D.C. Council proposal are advocating for a tiered version of the tax to privilege pooled rides, the sub-set of ride-hailing services where a customer is matched with a driver as well as other passengers headed in the same direction. No studies, however, show that pooled ride-hailing services have positive effects on congestion, the environment, resident mobility, or our workforce. The D.C. Council should follow the lead of Chicago, and more recently New York, and approve both the 6% tax increase and the data-sharing requirement for ride-hailing services.

Katie Wells, Ph.D. (corresponding author)
Urban Studies Foundation Postdoctoral Research Fellow
Kalmanovitz Initiative for Labor and the Working Poor
Georgetown University
209 Maguire Hall, Washington, D.C. 20057
phone: 202-841-6644

Kafui Attoh, Ph.D.
Assistant Professor of Urban Studies
The Murphy Institute
City University of New York SPS
25 W 43rd Street 19Fl
New York City, NY 10036

Declan Cullen, Ph.D.
Visiting Assistant Professor
Department of Geography
George Washington University
801 22nd Street, NW, Suite 216
Washington, D.C. 20052

The authors are finishing a two-year research project about the work lives of Uber drivers in the D.C. area. The research has been profiled by WAMU, CityLab, and Fox5 News. Two previews of findings are here and here. The project received funding from the Ewing Marion Kauffman Foundation. The contents of this piece are solely the responsibility of the authors.