September 30, 2022

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Long term news

More taxes would stall car-sharing business

Proposed legislation in the Michigan House could halt a promising new side hustle for those who own cars they don’t need to drive every day, and are willing to rent them to others.

New car-sharing apps are a burgeoning alternative to large rental companies. The proposed laws would stall them by further taxing owners who’ve already paid the state taxes on their vehicles.

Critics of the bills say rental companies have noticed that those who use apps that connect car owners with others who want to rent them short-term aren’t paying the same fees and taxes as conventional rental car companies. They’re crying unfair competition.

Legislators must be careful they don’t overreact and stifle innovation. 

Rather than raising taxes on entrepreneurs, a better approach would be to reduce the overall tax burden for consumers of rental vehicles.  

Apps such as Turo or GetAround work like AirBnB, the home rental service. Owners can rent out vehicles while they’re not using them. But unlike rental companies, their customers don’t pay taxes and fees.

Instead, the owners pay the state through sales taxes and registration fees. They also must pay local, state and federal income taxes on the money they make.