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What’s Good for the Consumer is not Always Good for the Community


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In the sharing economy there’s nothing more ubiquitous than Uber and Airbnb. Uber may be closer to becoming a verb, if it hasn’t already. I’ve heard friends tell me “Let’s Uber it.” With it’s great innovative idea that makes low prices and convenience available to millions worldwide, it’s certainly a great thing for the end user. But, that’s where it ends. As a community, they’re not exactly model citizens. And, here’s why.

The same creative and innovative ideas are at work when it comes to Uber and Airbnb filing taxes. Yes, taxes! After all, they’re all learning from an A-List of tax avoiders – Google, Facebook and Apple. Airbnb, for example, has a network of 40 different subsidiaries including in (you guessed it!) Ireland, through which they steer most of their transactions, and hence profits, away from the US. Money from 190 countries in which Airbnb operates flows directly to a payment center in Ireland.

Don’t get me wrong. I am all for competing on technology. In fact I believe in disruption, competition and free markets. But, when all those creative ideas create an unfair advantage for the local cabbie or the B&B that operates in your town or city and pays taxes, it kinda seems unfair. The sharing economy will take in $335 billion by 2025 growing largely at the expense of companies that pay US taxes.

I understand that it’s not a zero-sum game. After all, Airbnb also enables the person to rent that extra room and make some money that could be spent on goods and services in the local community. I have used ride-sharing services and have been an Airbnb customer myself. But still, IMO, that’s different. It gives these large companies an unfair “tax” advantage at the expense of the community whose citizens play by the rules. To add insult to injury, Sam McDonagh, the Country Manager for Airbnb in Australia testified in front of the Australian senate citing that the #1 reason for Airbnb to locate to Ireland was access to great talent. It wasn’t to avoid taxes. You know, because the US doesn’t have much talent to offer. Seriously!!

So, the next time you “Uber” it to your next Airbnb vacation, just don’t be surprised if your community B&B is closing it’s doors and if the roads to the airport are bumpy. It’s probably because your town’s share of taxes are parked somewhere in Ireland and they don’t have enough to fix the potholes!

source: Bloomberg Businessweek

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