3 ms·

"... drivers who contend they should be classified as employees and therefore entitled to reimbursement for expenses, including gasoline and vehicle maintenance

by jobu 10y ago

"... drivers who contend they should be classified as employees and therefore entitled to reimbursement for expenses, including gasoline and vehicle maintenance." Isn't all that tax deductible? Uber pays the drivers, and then the drivers will have to pay back the government since they can't claim it as a tax deduction anymore. Meanwhile, Uber gets the deduction and gets a tax refund. There has to be more to this than just mileage expenses, right? Otherwise it's a huge legal bill for a simple accounting shift. EDIT: Nevermind - I was confusing tax deduction with tax credit.

harryh 10y ago
It's not just an accounting shift. Getting 100% reimbursed for, say, your gas expenses is a lot more money than getting to deduct those expenses. A tax deduction is not the same thing as a tax credit.
- Consultant32452 10y ago
  It's only not an accounting shift if it's awarded after-the-fact from this lawsuit which is a one-shot deal. In an efficient economic model the reclassified "employer" would lower your future earnings to pay for the fuel costs they were previously expecting you to pay for. And then it definitely is just an accounting shift.
  - harryh 10y ago
    It's not just about money though. There is a much greater administrative burden to hire an employee than to hire a contractor.
    - maxerickson 10y ago
      I think for large companies administrative burden is pretty much just a matter of money. (I had initially said they were fungible, but it only works one way)
      - harryh 10y ago
        Sure. But that still makes it more than just an accounting shift. Things will be different if Uber drivers are employees. It won't just be moving around numbers in a ledger somewhere.
    - Consultant32452 10y ago
      That is true. I was speaking solely about the mileage reimbursement/fuel costs. How much of these new ancillary administrative costs Uber will be able to push down to their former contractors/new employees remains to be seen.
  - _delirium 10y ago
    If Uber drivers are employees, there is a floor (the minimum wage) on how much Uber can lower their wages to account for the fuel costs. Employees have to be paid at least minimum wage after expense reimbursements.
  - SilasX 10y ago
    Mostly agree, but there's arguably a relevant, persistent inefficiency here in the sense that it looks deceptively good to advertise the gross hourly rate than the hourly profit. (Both of which are higher than the after-tax profit.) IOW, fewer drivers would probably join on from seeing "Make $30/hour [gross]!" than e.g. "Make $15/hour + expenses!"
Guvante 10y ago
If I spend $100 on gas and get reimbursed, I get $100 (tax free), if I don't get reimbursed the US government gives me a $30 discount (assuming a 30% tax bracket) on my income tax. That $70 difference for the drivers is a lot more than an accounting shift. Uber saves $30 on their corporate income tax but they have to pay out $100 to the driver so are also out money.

by jobu 10y ago

harryh 10y ago

It's not just an accounting shift. Getting 100% reimbursed for, say, your gas expenses is a lot more money than getting to deduct those expenses. A tax deduction is not the same thing as a tax credit.

Consultant32452 10y ago
It's only not an accounting shift if it's awarded after-the-fact from this lawsuit which is a one-shot deal. In an efficient economic model the reclassified "employer" would lower your future earnings to pay for the fuel costs they were previously expecting you to pay for. And then it definitely is just an accounting shift.
- harryh 10y ago
  It's not just about money though. There is a much greater administrative burden to hire an employee than to hire a contractor.
  - maxerickson 10y ago
    I think for large companies administrative burden is pretty much just a matter of money. (I had initially said they were fungible, but it only works one way)
    - harryh 10y ago
      Sure. But that still makes it more than just an accounting shift. Things will be different if Uber drivers are employees. It won't just be moving around numbers in a ledger somewhere.
  - Consultant32452 10y ago
    That is true. I was speaking solely about the mileage reimbursement/fuel costs. How much of these new ancillary administrative costs Uber will be able to push down to their former contractors/new employees remains to be seen.
- _delirium 10y ago
  If Uber drivers are employees, there is a floor (the minimum wage) on how much Uber can lower their wages to account for the fuel costs. Employees have to be paid at least minimum wage after expense reimbursements.
- SilasX 10y ago
  Mostly agree, but there's arguably a relevant, persistent inefficiency here in the sense that it looks deceptively good to advertise the gross hourly rate than the hourly profit. (Both of which are higher than the after-tax profit.) IOW, fewer drivers would probably join on from seeing "Make $30/hour [gross]!" than e.g. "Make $15/hour + expenses!"

Guvante 10y ago

If I spend $100 on gas and get reimbursed, I get $100 (tax free), if I don't get reimbursed the US government gives me a $30 discount (assuming a 30% tax bracket) on my income tax. That $70 difference for the drivers is a lot more than an accounting shift. Uber saves $30 on their corporate income tax but they have to pay out $100 to the driver so are also out money.