Legislation aims to kill part of sharing economy

Jon Fleischman
Jon Fleischman

For decades, California has embraced and celebrated technological innovation. That is why the Golden State is home to the entrepreneurs who created the world’s groundbreaking and most important products and systems, from search engines to social networks to smartphones and, most recently, to platforms that embrace the sharing economy.

How did we do this? Well, we did not allow special interests to use politics to defend the old and entrenched interests against new and disruptive technologies that benefit consumers but displace monopolies and outdated business models. We laugh at corrupt states and cities that try to ban Uber through taxes and regulation. They tie themselves to the past.

This may change. State Sen. Mike McGuire, D-Santa Rosa, has introduced legislation, Senate Bill 593, to protect big businesses – the ones that make big campaign contributions – that would damage and perhaps kill a part of our new sharing economy.

McGuire’s Luddite legislation aims three bullets at the heart of the sharing economy.

First, he wants to force private companies like Airbnb to hand over data without meeting basic due-process limitations enshrined in all other parts of American law. City and county governments would be able to demand data about any person renting out an extra bedroom out of idle curiosity and nothing more. This is especially ironic considering his co-authorship of the California Electronic Communications Privacy Act, SB 178, which would require all government entities in California, including law enforcement, to first obtain a valid warrant when seeking access to an individual’s digital data or metadata.

In McGuire’s mind, apparently, maintenance of liberty is absolutely critical and cannot be violated except with a proper warrant, exigent circumstances, imminent threats to public safety, or … home sharing?

If McGuire has his way, your mobile phone company may soon be required to turn over data showing how fast you were driving on Highway 101, and online stores may have to turn over the list of books you have ordered, just so the government can rifle through records to find potential evidence of illicit activity or unpopular views.

Even more disturbingly, McGuire attempts to shroud his data-collection provision as a simple tax-collection and enforcement tool. This is dangerous and misleading, and it highlights the importance of maintaining a strict firewall between the privacy of data collected for tax purposes and whether it can be used for any other government purpose. We are forced to give tax data to the government so they can make sure we pay what is owed, not so it can be used to enforce a planning code, or settle a dispute with our health insurance company, or learn about our business dealings. Subpoenas and proper legal due process are necessary for that.

Second, McGuire wants to take the Internet and wrap it in red tape. Under his bill, private companies would have to review listings before they are posted to see if they followed every municipal code, zoning regulation and homeowners association rule that might be present in the more than 35,000 cities around the world where Airbnb has listings. This demand is impossible for any government or private company to meet, and Congress has prohibited this kind of local overreach.

Finally, McGuire attempts with the stroke of his pen to settle a complicated dispute regarding transient occupancy taxes that is currently pending before the California courts. This is particularly significant because the voters have specifically prohibited expansion of hotel taxes without a vote by the people. It is telling that McGuire would attempt to circumvent the right of the people to vote on these important issues.

There is no doubt that companies like Airbnb have important work to do in providing tools and instructions to users to pay local taxes. Already, the company provides personal tax forms to ensure the payment of regular income taxes, and as it grows, it is imperative that it develop solutions to better streamline how hosts pay transient occupancy taxes.

These things take time, however. We would all be better served if McGuire studied the sharing economy entrepreneurship that is creating jobs and wealth in California and across America, instead of allowing himself to be held captive by narrow-minded special-interest groups.

Jon Fleischman is the publisher of the website on California politics. Grover Norquist is president of Americans for Tax Reform.