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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 deducti
by harryh 11y 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 11y agoIt'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 11y agoIt's not just about money though. There is a much greater administrative burden to hire an employee than to hire a contractor.
- maxerickson 11y agoI 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 11y agoSure. 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 11y agoThat 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 11y agoIf 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 11y agoMostly 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!"