A Tax Reform Tweak With Big-Time Benefits
A generational opportunity to reform taxes should update the tax code for the next generation economy. Well-meaning legislators should tweak their bill by adding the New Gig Act, which would immensely help many millions of Americans who work in the “sharing” or “gig” economy — people who drive for Uber or Lyft or work for Grubhub, Postmates and other millennial enterprises.
This would be true tax reform at no cost to American taxpayers. It would simplify taxes for these workers — who now have to do multiple filings and often just don’t bother — as well as the companies who have to file as well.
This amendment would classify these “on-demand economy” workers as independent contractors, as that’s what they are. They’re not simply employees of any one company.
According to the Aspen Institute, 45 million Americans say they’ve worked in this growing new economy, and 85 million Americans say they’ve been customers of these companies and contractors. According to J.P. Morgan Chase, 2.5 million Americans work for on-demand economy entities in an given month, representing anywhere from 20 to 30 percent of their income; and this group of contractors is only going to grow.
This is just plain common sense. The amendment reflects where our country’s economy is going and gives more workers more incentives and choices to find jobs, earn a living and — especially for younger people just starting out — it gives them a more flexibility and opportunities to find out what career path they want to pursue.
This addition to the tax reform bill is sponsored in the House by Congressman Tom Rice (R-SC), who himself is a certified public accountant and tax attorney. This is how Congress is supposed to work: citizen legislators crafting bills that benefit the public based on their personal experiences in private life. A companion bill in the Senate is sponsored by Sen. John Thune (R-SD), who has an MBA.
One of the goals of tax reform, as outlined right from the beginning by the White House, House Ways and Means Committee Chairman Kevin Brady and other congressional leaders, was to simplify the process by which Americans pay their taxes. If it’s a noble goal to get the filing procedure for most Americans down to a single page of paper, then let’s simplify things for this growing number of American workers so they can a) file less forms, b) have the requisite amount of their income and payroll taxes withheld instead of their having to make quarterly payments, and c) ensure they comply instead of risking legal exposure and penalties because the process is too complex and time-consuming.
More compliance means more money coming in without raising taxes on anyone. This likely means the New Gig Act might actually get bipartisan buy-in.
So many Americans, especially young people, have become disillusioned with their government. This would be one effective way to prove to them that someone is listening and working to make their lives better and giving them more opportunity to succeed and prosper.