Uber Hit with $650M Employment Tax Bill in New Jersey

I am really curious how they arrived at any of the numbers in this article. Seriously, what other large employers make it to hundred plus million per year? Are they just up and deciding that anyone who did one trip is now an employee? Is there a source that shows how much each company pays per year in this state? who else is equivalent?<p>this isn&#x27;t about protecting the drivers, this is about protecting the taxi industry and metropolitan mass transit unions both of which were under threat of better service being offered at lower costs both to tax payers as a whole as well as customers. you don&#x27;t have to like Uber to understand what this is really about. It is protecting the current gravy train the politicians rely on to stay in office.<p>edit:<p><a href="https:&#x2F;&#x2F;www.njbia.org&#x2F;get-njbias-tax-changes-for-2019&#x2F;" rel="nofollow">https:&#x2F;&#x2F;www.njbia.org&#x2F;get-njbias-tax-changes-for-2019&#x2F;</a><p>Unemployment Insurance, New Jersey Workforce Development and Health Care Subsidy Fund Taxes<p>&gt; Employee and employer state Unemployment Insurance tax rates will apply to the first $34,400 of an employee’s earnings in 2019 (up from $33,700 in 2018).<p>&gt; For 2019, employees are subject to a 0.0425% (.000425) Workforce Development Partnership Fund tax rate. The employee Unemployment Insurance tax rate remains at 0.3825% (.003825) of taxable payroll.

There&#x27;s no escaping this from states like NJ, CA, IL, MA, and NY. These states (of which I am a member of) are broke with pension obligations waiting to bankrupt the government. Taxes are already high both on income and property so there&#x27;s nowhere to go there. They have old infrastructures and although the citizens are heavily taxed, government can&#x27;t make improvements in large part because of lifetime pension obligations to a rapidly growing group of retirees - many of which have already moved to tax free states like FL.<p>So these states are the vanguard in finding ways to collect more tax revenue any way they can. Sharing Economy companies are simply the easiest to harvest right now.

Jersey City just had a public referendum on short-term rentals that AirBnB spent millions of dollars lobbying against. It&#x27;s good to see that the both the public and its elected officials are coming up to speed on the realities companies like Uber and AirBnb force upon them by skirting the law.

If these Uber drivers were correctly reporting their income (and I can&#x27;t see how they wouldn&#x27;t be--Uber surely 1099s it) -- wouldn&#x27;t each individual driver be paying these same taxes, even as a self-employed person? The self-employed pay into Social Security for both their portion and the employer&#x27;s portion, this also includes SSDI. I&#x27;m not sure how NJ does their state tax calculation.

Is the limited-liability corporation that Uber uses called &quot;Raiser LLC&quot; or &quot;Rasier LLC&quot;? I swear I&#x27;ve seen it spelled both ways, although only &quot;Rasier&quot; in Uber receipts.<p>What&#x27;s the etymology?

Ok, is it just cynical of me to say &quot;Ok, here is their &#x27;one time expense&#x27; for this quarter to show why they aren&#x27;t profitable yet?<p>That said, the company has so much regulatory risk associated with it. It has the feel that the &quot;system&quot; is working very hard to punish the &quot;disrupter&quot; in a fatal way to discourage other such disrupters.

If the state wins, I wouldn&#x27;t be surprised if Lyft and Uber pulled out, or at least increased their fares by a substantial amount.

Even though Uber will eventually be ruined by the bad press, we should all appreciate what they did. The taxi industry was an overregulated high-rent business dominated by insiders, delivering shitty service at high prices, and nobody was able to break into it.<p>Uber broke that and introduced people to what is possible with the free market. Now the government can&#x27;t just go back to its corrupt ways. People will notice if service degrades.<p>I hope Lyft, Uber, and others are driven out of some markets just so we can see if there&#x27;s a backlash against the unholy union of government, left-wing unions, and taxi cab companies.<p>I feel like people should be reminded about what the government and taxi cab union dominated market was like with their hedgefund insider deals (to purchase medallions) and other corrupt dealings.<p>People always assume decapitating Uber will bring an utopia ... they should be reminded about how corrupt government is when nobody is watching (and people usually aren&#x27;t watching).

Please don&#x27;t quote with code blocks. It breaks formatting by forcing horizontal scrolling, and is especially bad on mobile.<p>Requoted:<p>&gt; Employee and employer state Unemployment Insurance tax rates will apply to the first $34,400 of an employee’s earnings in 2019 (up from $33,700 in 2018). For 2019, employees are subject to a 0.0425% (.000425) Workforce Development Partnership Fund tax rate. The employee Unemployment Insurance tax rate remains at 0.3825% (.003825) of taxable payroll.

Or it could be about protecting employee rights against exploitative corporations who flout the law for profit.<p>Edit: and society for that matter. See Al Capone, a murderer, being finally arrested for tax evasion as an example.

Another great example of the government mafia stifling innovation and trying to extort and rob everyone at every opportunity. Government is the big iron ball attached to our foot holding us all back.

Looking forward to seeing a repeat here in NL.

I still dont get why a cab driver must get a cab driver license and a uber driver doesnt. Same service, just another name.

I mean, I used to get tech support gigs on Craigslist all the time. Should Craigslist have been responsible for paying me minimum wage during that time?

Über was just much more lucky &#x2F; smart on its IPO than WeWork, as VCs could get rid of their overvalued assets before the company was started to be regulated like a normal company.

In guessing they will just get another round of investment when running an illegal taxi business at scale...I mean disrupting. Oh well I don&#x27;t mind the subsided rides. The drivers have been very pleasant and I&#x27;ll hate going back to cabs when this came party ends

This is not Uber&#x27;s real problem. The much bigger problem is that Uber&#x27;s business model by definition cannot be profitable, and here is why:<p>Let&#x27;s start with the costs of the business model.<p>What are the two costs involved in transporting a customer from point A to point B? They are: - The car’s time - The (human) driver’s time<p>Operating or leasing a car for a certain amount of time (maintenance&#x2F;insurance&#x2F;gasoline) has not become significantly cheaper since Uber was created, so there is no cost reduction here.<p>Hiring a human&#x27;s dedicated time (at least minimum wage) has also not become significantly cheaper since Uber, so here too there is no cost reduction.<p>Therefore the cost to transport something from point A to B has stayed exactly the same, before Uber and after Uber.<p>To transport something from point A to point B, someone must still carry this unavoidable cost. If the customer is not carrying this cost, then Uber must be carrying it. Uber can do so for now because investor money has subsidized the cost. But Uber can’t do this forever because investors will lose patience and stop the subsidy.<p>Uber can only be profitable once the unavoidable cost transport is passed on entirely to the customer. At that point, Uber will have to charge the same price as any taxi. Stated differently, Uber can never be more profitable than a taxi company on a per-ride basis.<p>Given that customers have no loyalty to a ride-share service, because every ride is virtually identical, any taxi company can build a similar service, removing any &quot;walled garden&quot; or &quot;network effect&quot; Uber may have hoped for. In fact, Uber clones are doing well in other countries and are creating significant headwinds for Uber.<p>Uber therefore has no hope of ever delivering its promises unless it can deliver driverless cars. Even if it can do that, the technology will quickly become commoditized and ubiquitous, meaning that any other ride-share service could offer it as well, once again removing any advantage, and driving margins for all ride-share services to near zero.

&gt; The money that they’re not paying into the unemployment and disability systems is being picked up by the states and the taxpayers.<p>Isn&#x27;t it true that independent contractors are <i>not</i> eligible for unemployment or disability claims?<p>Yes that&#x27;s true.<p>Given that, it is false that the &quot;cost&quot; is being picked up by others, because there is no cost here.<p>And given that the state is seeking retroactive reimbursement for past years, all independent contractors in the state who worked at this during this time period should be retroactively reimbursed for times of unemployment and for disability issues. Odd the state&#x27;s not offering that.

&gt; It’s not clear whether the company ever paid any of that bill.<p>What&#x27;s the point of these fines if NJ and other governments have no real power to enforce them? This seems to be all for show. Sure, we throw poor people in jail over a $20 fine. But Uber doesn&#x27;t pay tens of millions and nothing at all happens to them. It&#x27;s impossible to see this as anything other than separate justice systems for the rich and poor. If Uber was a real person, they&#x27;d probably be in jail for life. If they weren&#x27;t white, they&#x27;d be sitting on death row. Instead, we talk of them as if they are some sort of success: a company breaking laws and hemorrhaging money with no chance in fucking hell of ever being profitable.