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It's possible they really are paying 10% of their total paycheck in taxes after the EITC, but only if they are making very little money and have children. The

by learc83 10y ago

It's possible they really are paying 10% of their total paycheck in taxes after the EITC, but only if they are making very little money and have children. The other possibility that I didn't think of is that it's 10% of their total paycheck because they spend half of their paycheck on deductible expenses, but that doesn't mesh with the 10% expenses section. I think the most likely explanation is that the drivers you're talking about are underestimating taxes due. They have to pay themselves since there's no withholding, and it usually takes years before underpaying taxes catches up with you. And yeah vehicle depreciation is a big expense. It's probably more than 1/3 of total pay if a driver is actually making a small enough income to have a 10% tax rate. I've heard many Uber drivers who say they are making almost nothing after expenses including vehicle depreciation.

Bartweiss 10y ago
This seems like a good summary. It's worth remembering that a lot of Uber drivers are making relatively little money. Some are students, some are part-timers, but no matter what Uber ROI drops off more aggressively than most jobs (you work surge times, then constant-demand times, then your rates collapse). I definitely have the sense that Uber's current model isn't sustainable - the money looks good because they constantly bring on new drivers who underestimate tax and depreciation, and count their salary in weekly-paycheck terms. I suspect that either they'll become more generous once they're spending less on regulation/campaigning, or something else will fall apart.
- marcosdumay 10y ago
  It may be sound for part-time drivers. If they are people that need the cars for other activities, depreciation is a sunk cost, and should not be taken into account. But that does not make the basis for a sound self-driving fleet.
  - learc83 10y ago
    Depreciation is also a function of mileage.

by learc83 10y ago

Bartweiss 10y ago

This seems like a good summary. It's worth remembering that a lot of Uber drivers are making relatively little money. Some are students, some are part-timers, but no matter what Uber ROI drops off more aggressively than most jobs (you work surge times, then constant-demand times, then your rates collapse). I definitely have the sense that Uber's current model isn't sustainable - the money looks good because they constantly bring on new drivers who underestimate tax and depreciation, and count their salary in weekly-paycheck terms. I suspect that either they'll become more generous once they're spending less on regulation/campaigning, or something else will fall apart.

marcosdumay 10y ago
It may be sound for part-time drivers. If they are people that need the cars for other activities, depreciation is a sunk cost, and should not be taken into account. But that does not make the basis for a sound self-driving fleet.
- learc83 10y ago
  Depreciation is also a function of mileage.