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NYC Votes To Set Minimum Pay For Uber, Lyft Drivers (arstechnica.com)
An anonymous reader quotes a report from Ars Technica: On Tuesday, New York City's Taxi and Limousine Commission voted to set a minimum pay rate for Uber, Lyft, and other on-demand ride-hailing drivers. The new rate will be set at $17.22 after expenses, or $26.51 per hour gross. New York is believed to be the first city in the nation to implement such a pay floor. Four months ago, the Big Apple also imposed a cap on the number of such vehicles in the city. The Independent Drivers Guild, a local affiliate of the Machinists Union, advocated for the change. Meanwhile, Uber has already put out a statement saying that increased driver earnings "will lead to higher than necessary fare increases" and that the new rules do not adequately take into account "incentives or bonuses forcing companies to raise rates even higher." "Today we brought desperately needed relief to 80,000 working families. All workers deserve the protection of a fair, livable wage and we are proud to be setting the new bar for contractor workers' rights in America," Jim Conigliaro, Jr., founder of the Independent Drivers Guild, said in a statement.
I have a good friend driving for both in NYC. He is driving a 4 or 5 year old car (he bought it I think 2.5 years ago). He makes about $50,000/year driving. He has a part time restaurant job, as well.
He bought the car specifically to drive for Uber (and later started Lyft). He has been paying extra on the car. It is nearly paid off now. The car has paid for itself, including all maintenance and insurance, and gas. The money left over paid part of his rent (he only rents a room, but still pays too much). The remainder of the rent and his other expenses are covered by the restaurant gig.
In another year he will have the car free and clear and will (probably*) still be making money with it. In the meantime, he has had use of the car for a couple of years. This is not negative money.
*: Don't get me started on Uber's long-term survivability.
Because in NYC (and maybe other parts of the US), there's a difference between a taxi (unbooked/street-ordered) and a limo (pre-booked). Taxis are colored/marked in certain ways and pick up riders when called from the sidewalk. Limos (or any pre-ordered/booked such service) are ordered via phone calls. They can't pick up people off the street if flagged down and don't wear taxi markings. (Conversely, however, taxis can be called for pickups.)
Uber and Lyft are using apps to make prearranged orders for a car service, thus counting as limos and not taxis.
Taxi companies are of course pissed. But there are legitimate concerns that these companies could easily screw over drivers due to associated costs (fuel, wear and tear on vehicles, and so on). They control the algorithm and therefore the prices of the fares.
I suppose a way around this is to let individual drivers bid on fares, reflecting their own costs. But I guess a minimum pay is acceptable as well.
(There are a few other things that blur the line between Uber and taxis. Taxis have mile meters, but limos don't. Limos usually charge by the hour with minimums. Uber is charging by the mile and used for quick rides. Taxis also are allowed to wait in certain areas or circle around blocks/locations looking for fares. Limos don't. Uber drivers have been doing this, I hear.)
So unless they setup as an LLC, register a business name, and register for a DOT number that's on the vehicle, how can they write that off as a business expense. If they don't, they are NOT as business and are not employees of Uber / Lyft (well at least not historically in most places).
Standard "self-employed" IRS forms (Schedule C as I recall) allow one to account for business use of a car.
Here is what H&R block says about it: https://www.hrblock.com/tax-ce...
To deduct vehicle expenses, you can use standard mileage or actual expenses. For either method, keep a log of the miles you drive for your business. Both methods allow self-employed tax deductions for tolls and parking fees.
If you use the standard mileage rate, you can only deduct the mileage at a standard rate. For 2017, the rate is $0.535.
Over the past few decades, with three different vehicles, of various ages (new through 14 years of age), I have had a couple of years where the actual expenses have come close to the standard mileage rate, but usually the standard rate is higher (and easier to track). Usually for me business use of the vehicle has been under 10% of the total use, which is much less than a ride sharing vehicle would be.
Oh AC...you so silly. But let's work out the math here.
Even just taking the start of what you wrote: You drove for 1 hour, grossed $40, netted ~$20 and are ahead of the $17 minimum in TFA.
But also, that's the write-off which typically is higher than actual cost and DOES INCLUDE the vehicle cost/depreciation/fuel/etc. The whole point of that rate per mile is the actual, total cost to be driving the vehicle. Lets break that down a bit:
For 12k miles it's $545/month.
For 24k miles it's ~$1100
For 48K miles (typical for a full time uber/lyft driver) that's $2200
Now, $2200 is your IRS approved cost write-off. If your actual costs are lower, it's more money in your pocket. Working backwards from there:
4k miles / 25mpg * $3/gal fuel = $600. This depends on your vehicle and gas prices but uses current fuel and 2016 MPG numbers. A prius will be less.
$20k - average price for a 3 year old car or ~$400/month over 5 years - actual depreciation will be *less* than this of course
$200/month insurance - varies significantly by location, but even doubled this is easily viable.
That leaves a full $1000 a month for maintenance which is overkill so your tax deductions will net you ~30% back on whatever of this you don't spend. Conservatively, that's at least a few grand in your pocket per year.
So after working all that out, you're still making $40k per year including full depreciation of the vehicle in 5 years and all maintenance/fuel.
You can get rich if you own a politician, but you have to be rich to buy one in the first place.