Taking part in the sharing economy shouldn’t place you above the law

There’s nothing like a press release from the sharing economy to make a 20th-century caveman long for the good old days. Consider this recent one from Airbnb, the online juggernaut that rakes in billions from the hospitality industry by “disrupting” it:

“Today, Airbnb, the world’s leading community-driven hospitality company, announced a historic tax agreement with the Missouri Department of Revenue that will allow the company to collect and remit state taxes on behalf of its 6,300 Missouri hosts. With the tax agreement in place, the state will be able to fully capitalize on more people visiting Missouri and staying longer through home sharing.”

Really?

What a wondrous thing this is—actually, “historic”—that a company that says it facilitated 289,000 guest arrivals in the state last year would finally be “allowed” to collect and remit sales taxes on $28.9 million in 2017 income earned by its hosts. The state sales tax portion of those revenues (not including city, county, and tourism taxes) would have brought Missouri $1.1 million in revenue last year.

Funny thing: The rest of us who are in business are required by the state to collect and remit sales taxes where applicable. The only thing other companies are allowed to do is to avoid stiff late fees, penalties, and even closure for failing to comply with state sales tax laws.

It’s not quite clear why Airbnb—and presumably other “community-driven hospitality companies”—have been afforded such kind treatment by the Department of Revenue. First, by their own admission, Airbnb didn’t bother to collect taxes in excess of $1 million. Then, apparently, the company was afforded the opportunity to negotiate with the government rather than be prosecuted by it. Finally, it got to give itself a victory parade for the “historic” act of coming to an “agreement” with the state.

Surprisingly, our state government hasn’t done much to tout this achievement. That can’t possibly sit well with Governor Eric Greitens, who certainly would want to use it in his upcoming presidential campaign. Give the man credit: This is cutting-edge stuff. Why, according to Airbnb’s press release (and its website), Missouri came to this climactic moment after only 38 other states and 350 local governments did first. We’re pioneers.

In fairness to Airbnb, it’s hardly the only company making money through an internet-based platform of people renting out rooms, apartments, and houses; it just happens to be the largest. And though it seems strange to congratulate a company for being open to following the law, countless competitors aren’t even doing that.

All of this raises a larger question: What is going on here? People operating businesses out of their homes are not exempt from taxation in America. And if you advertise broadly the rental of your house or your apartment—or a room or a closet therein—and you receive money for this service, welcome to the hotel-motel business.

No, as a host on Airbnb or any other website, you are not a home sharer; you are a hotelier. Home sharers are people who let their friends crash at their place for a night or week or month. In ancient times, these visitors were called roommates or unwelcome houseguests. And yes, I’ll concede that if you want to charge such guests money to live with you for a while —or you’re getting paid to stash Aunt Harriet and her stuff in your basement—it’s fair to argue that you’re not a hotelier.

There’s absolutely nothing wrong with serving as a host on Airbnb. Nor is there anything wrong with patronizing the site as a hotel guest. It’s actually a great idea, and given that Airbnb started from scratch in 2007 and now has a market capitalization of something like $25 billion, I’ll happily pipe down about judging it as a business model. It’s not a city magazine, mind you, but it’s doing pretty well.

The model is seriously brilliant because millions of people benefit on both sides of the equation: The landlords make extra money, and the renters often save money or gain the flexibility of having an entire family under one roof. It’s all good. And it’s obviously empowered by the endless technological potential of the present century.

But there is a maddening side to this, one that parallels the maddening side of the similarly prosperous ride-sharing industry: It’s a business model that cloaks itself in technology—and more important, a blizzard of trendy techno-babble—for the purpose of gaining an unfair advantage to “disrupt” traditional business.

That is wrong. The notion of a level playing field is not some tired old canard that needed to vanish with your wall phone. Exciting new technologies can replace tired and outdated competition in any industry, but that doesn’t mean that public policy—be it on taxation issues, public safety, or consumer protections—should be annihilated in the process.

If Uber and Lyft make billions using the latest technology to transport people by motor vehicle from point A to point B for a cost based on time and distance, more power to them. But they’re in the livery business: They’re operating taxi companies, not “technology companies.” They’re selling transportation for money, not engaging in some experiential, existential, “ride sharing” transport, no matter how huggy-wuggy they purport to be.

You’re a taxi driver, pal. Nothing wrong with that, but you need to go through the same registration and insurance and fingerprinting rules as your fellow drivers, even if you’re certain that you’re a hipster. Then, if you run existing cab companies out of business, good for you. Our system has always rewarded people who build a better mousetrap. But don’t call it mouse sharing so you don’t have to pay taxes when you sell one.

It’s not a matter of semantics; it’s a matter of common sense. It’s great to have friends over for a dinner party. If you want to charge them, it’s a little tacky, but go for it. But if you want to advertise your cooking on the internet and then sell space to all comers at your dining room table, you are not food sharing; you’re operating a restaurant out of your house. Have your kitchen inspected, collect sales tax, and (we hope) put an “A” on your living-room window.

In the case of “home sharing,” welcome to the hotel business. When you’re in the hotel business, we the people make certain demands of you, and I’m not talking merely about taxation. All manner of health and safety and fire inspections are required of our hospitality industry, as well there should be.

It’s actually a legitimate role of government to provide a modicum of protection to hotel guests through regulations of this nature, just as it is to provide a layer of protection to taxicab customers by having drivers undergo background checks. This is not onerous or overreaching. It’s a perfectly obvious public service. And whether you provide hotel rooms or drive a taxi 365 days a year or once in a blue moon, you should accept reasonable regulation as part of the cost of doing business.

Even as it concedes the point, grudgingly, that home-share hosts should collect the same taxes as hotels and motels, don’t expect the multibillion-dollar industry to roll over on issues of regulation. Indeed, last year’s proposed legislation even included language prohibiting local communities from banning short-run rentals.

Here we go again: We’re hip, we’re cool, we’re trendy, we’re disrupters—so we don’t need your stinking zoning rules in our face. We’ll just get our friends in state government—the ones who let us conduct our sales tax negotiation—to eviscerate the basic concept of local zoning rights in the name of sharing.

I really want to like the sharing economy, and I think it has great promise if it isn’t inextricably linked with the principle that being a disrupter means being above the laws that govern the rest of us.

I don’t get that. But in fairness, we never got paid to share our cave dwellings with strangers in the last century.