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tv   Key Capitol Hill Hearings  CSPAN  May 31, 2016 7:00pm-8:01pm EDT

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continues to change individuals and families. on-demand platforms like ours provide a new earning option that is accessible to millions of americans. of course the emergence of the platform economy sparked an intense debate on the classifications of workers versus independent contractors. the current classification system was defined around a much different economic and technological era. and has been shaped mostly by decades of regulations in court cases. as a result, it fuels uncertainty about what we can or cannot do to support our taskers while preserving their flexibility, independence in accessing our platform. many platform economy participants even do not know or are not fully aware of both their tax obligations and tax benefits as a result of earning income on platforms like taskgrab zbln taskgrabit. significant numbers of taskers are facing these types of challengers. for many, they sign up to join
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our platform, making their first forays into the world of self-employment. so many understanding the level of economic triggers, quarterly estimated payment files requirements but many do not. it is taskgrabit's interest to see our taskers -- greater flexibility and transparency with respect to tax planning would help maximize return on participation in our networks. it is their freedom as entrepreneurs. today's topic is just one of many where our taskers could benefit from better training. our taskers are also looking for direction on how to better market themselves and their services, access health care, and plan for retirement. we would like to be a resource, a partner and a collaborator for them. we urge congress and relevant government agencies to look at innovative approaches to support participating in the emerging platform marketplace. as a pioneer of the emerging market, taskgrabit welcomes the opportunity to work with poli policymakers as our company
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grows and matures. we became the first technology company to announce we'd follow the congressional black caucus in tech 2020 initiative. mr. chairman and ranking member velazquez, we thank you for you and your committee's interest in taking the time to understand our business and how it's changing what we call the future of work. we appreciate the bipartisan interest in the platform economy. most notably by the sharing economy caucus, co-chaired by california congressman darrell issa and eric swalwell. we hope we can channel this toward constructive policy solutions that will further enable taskrabbit -- further empower small businessowners and entrepreneurs provide services across the country. thank you. >> thank you very much. mr. reed, you're recognized for five minutes. >> chairman, ranking member
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verks lazquez, my name is morgan reed. associate director of a.c.t., app association. thank you for holding this important hearing. the app association represents more than 5,000 small business app makers. our member companies have ena e enabled the rise of the sharing economy by leveraging the connectivity of smart devices. sharing economy companies have grown rapidly over the past decade. they allow instantaneous communication, secure transactions and personalized relevance to consumers. moreover, the same factors allow small businesses and tens of millions of americans to earn more for their families with fwlex b flexibility and autonomy, powered by the smartphone in your pocket. these opportunities will cease to exist if federal regulations hi hinder the growth of the sharing economy. i want to highlight three things that affect our members. first congress and the internal revenue service should take great care to ensure federal tax code enables rather than stifles
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the sharing economy. specifically the treatment of all sharing economy workers as employees under the federal tax code would be detrimental especially to small businesses. second, small businesses need certainty and transparency in the tax resolution process. including the ability to settle disputes with the irs in an effective and efficient manner. legislation like that proposed by senator rob portman can help ensure that outcome. finally, congress should ensure fairness by guaranteeing that interpr internet taxes are based on the sellers' location. but beyond specific policy requests and legislative language, i'd like to take a moment to illustrate how the move to the sharing economy is far more than a repackaging of existing services. the popular media tends to describe the sharing economy in terms of companies that displace or disrupt an existing business model. ebay replacing the classifieds
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or the yard sale. uber-x replacing the taxi. vrbo replacing hotels. this is a false or limited dichotomy. the sharing economy not only replaces but also creates new con septembcepts in how people and interact. for example, a chicago-based small business utilizes a sharing platform to connect nutrition coaches from across the country to consumers seeking a healthier lifestyle. using the service, dedicated coaches answer questions, set benchmarks and help consumer meet their health goals. but they do not merely connect you to a nutrition expert. fundamentally switches the paradigm by getting users to change bad habits through ongoing relationships, not just the once a month meeting you would receive with traditional care. users can take pictures of the food they're eating, share it with their coach, get realtime feedback and reinforcement.
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coaches get insights so they can step in before a bad decision is made. actively working to prevent d s diabetes and other health problems. in short, creating healthy habits is relationship dependent. it doesn't exist without the tools that great our modern sharing economy. you would merely have individual nutrition coaches trying to change years of bad habits with static information given in isolated 60-minute sessions and it's no possible way that every nutrition coach and registered dietitian would create their own software to provide these new tools nor could a company writing the software afford to hire an army of nutrition coaches then hope to create a user base. the only way it works is through a sharing platform. one that allows users to find the help they use and fneed and coaches to take as many or as few clients as they want. so as you see, it replaces no existing industry. and there's a story like this in every single district in america.
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each one of you received a packet of baseball cards with companies from your district. now, not all of them are sharing economy businesses but they're all part of the revolution fakifake i taking place. one moving high-tech beyond big companies. in fact, our most recent study showed 82% of the top app companies are small businesses most of which hail from places other than silicon valley. the companiy ies you have in ha are looking to grow and succeed each with their own vision of what success looks like. the success of the sharing economy is predicated on an empowered workforce, one that can choose to drive for uber and l lyft. and platforms to attract users through better training, tools and clients without triggering a change in tax status. we urge congress to ensure that the rules we follow make sense in an age where the neighborhood yard sale is now nationwide and where a daily client may not live in the same country. the app ecosystem empowers the
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sharing economy and offering incredible ben nit efits to eac every american. i look towaforward to working w you. >> thank you very much. mr. kennedy, you're recognized for five minutes. >> the approach of this topic is driven by three considerations. the first is while the sharing economy is growing rapidly, it still represents only a small fraction of an increasingly c diverse labor market. second, internet platforms are delivering tremendous value to both consumers and workers. in a survey of over 4,600 workers from 11 platform companies only 7% said they were dissatisfied with their experience. workers earned an average of $7,900 over the previous 12 months which accounted for 22%
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of their total household income. the average hourly earnings was $28. the third consideration is the traditional employee and independent contractor distinction no longer serves much purpose for a growing share of today's labor market. largely by default, the common law test has become the basis for determining whether all of the major federal and state labor laws apply. the result is a large am of uncertainty and litigation which discourages companies from supporting gig economy workers and consumers in a variety of ways. some of the ways that companies have said that they would like to support their independent contractors include training and access to business and financial advice. such efforts could be enormously valuable to workers who are, after all, for all intents and purposes running their own businesses. within the tax field, help with tax advice, recordkeeping and
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withholding would be especially important. the tax laws are enormously complex. workers need to make a number of important decisions including what form of business to create. whether to set up a new savings plan and what salary to pay themselv themselv themselves. and they need to complete their tax filings in a timely manner. in a survey, 20% of online workers listed understanding tax and legal obligations as one of their top challenges. in addition, these platform companies could add value to both workers and consumers by setting prices, handling transactions, letting parties rate each other and conducting background checks. yet, such activities are often used as evidence of an employer/employee relationship.
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public policy should encourage companies to support their workers' careers. irrespective of the work relationship. if a company offers withholding to all workers, or pays for access to tax or business advice, or extends benefits to independent contractors, why would we want to discourage that? instead -- encourage that by insisting it must also be subject to minimum wage collective bargaining and unemployment insurance legislation. in a recent itif report, i argue that there are three approaches that congress can take to twin modernizing the nation's labor laws. the best option would be for congress to amend each federal labor law by replacing the common law test with a clearer one specific to that particular piece of legislation. the second approach would be to define a third category of workers somewhere between an employee and an independent
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contractor. finally, congress could give platforms devoted to personal services a temporary exemption from most labor laws. they're clearly independent contractors, anyway, under the common law test. the small size of the gig economy and the temporary nature of exemption reduce any risk to the broader labor markets. the world around us is rapidly changing. work arrangements will continue to diversify as companies respond. congress cannot dictate the shape of future work arrangements. it can, however, play a large role in helping workers get the kind of support they need to have good careers that fit into their increasingly complicated lives. thank you, again, for the opportunity to appear before you. >> thank you very much. we appreciate the testimony from all the panel here this morning and now we'll ask questions. i recognize myself for five minutes. mr. bruckner, i'll start with
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you. you testified that more than 60% of your survey respondents did not receive a form 1099k or form 1 1099 miscellaneous. >> i think the first thing we should do is recognize that the instructions for the form 1099 miscellaneous direct people to use the form 1099k for credit card reporting or payments made by credit card and that creates a tax reporting loophole for income that's earned by less than $20,000 because there are certain income thresholds for using the form 1099k and i think the irs should immediately reconsider those instructions on the form 1099 miscellaneous and see if it can be used for credit card payments less than the income threshold for $20,000. >> do you have a sense of how many folks aren't complying with the tax code because it's too
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complicated -- in the shared economy i'm talking about -- that's too complicated and too cumbersome versus, well, you knows, i'm not going to pay my taxes. >> that's a good question. i don't have a hard number on that, but i can tell you anecdotedly from when we talked to folks in the sharing economy or when we talk to tax preparers that specialize in advising folks that earned income with platform-related work, they were immediately confused as to whether or not they had to pay taxes on their income earned because in many instances they didn't get any 1099 at all. >> very good. thank you. mr. willey, i'll move to you now. we heard a lot today about the tremendous projected growth of the sharing economy in the coming years. what are taskrabbit's own sbimtsbimts estimates of the growth you might expect to see in your company, and what areas do you see as having the best growth potential? >> if history is any indication of the future, which we believe
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it is, year over year to date we're growing on a revenue basis. we're also growing our -- we have 15,000 organic applications from our taskers on a month to month basis. both of those indicate, one, we're still in the very early days of what the sharing economy could look like, and, two, taskrabbit is well positioned to be a figurehead of growth. >> thank you. mr. reed, i'll move to you at this point. >> we discuss the complexity of all this, how hard it is to get information, how to figure out how to comply with the irs code under existing -- under the existing code. very confusing. is it possible that there's some enterprising entrepreneur out there that could come up with an app, form their own company, to kind of solve this problem rather than the government figure it out for them? >> well, i think that it's a two-pronged test. one, yes, absolutely.
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in fact, there have been some early to market applications that attempted to make this switch. one of the real discoveries that we found is that an application that is on your device to help you with taxes is one that you likely only turn to at that moment of panic. what really we're seeing now is the fact you have to do an integrated application. that you need to be able to pull in the information from taskrabbit into your tax preparation software on an ongoing basis so you can keep track of it. in fact, that leads to one of the confusing elements we've all been discussing. if taxrabbit or any of these companies were to provide that kind of interactivity and that ongoing information flow in training, well, that might trigger the case of them being considered employees. so on the one hand, it's very hard to put together an application that draws the right information, and on the other, our platforms are concerned about the late liability they
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may take on by providing us the very thing we need to satisfy the first question you asked is, how do we get people to pay their taxes? >> thaunnk you. got time for one more question. mr. kennedy. even if we were able to implement a temporary legislative and regulatory moratorium on the sharing economy as you suggested, you correctly point out there are a meyriad of relevant state and local laws that bear on this sector. how would you address inconsistencies between federal action versus state and local? >> yes. i say two things to that. the first is i think there's room for an increased dialogue between the federal government and the states about what the common rules should be. you know, we would like, i think, ideally for there to be consistency at the federal and state levels and so encouraging reform at the state level, manages reform at the federal level be important. and the second is that congress
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can, to some extent, preempt state laws using the commerce clause and there's room for debate about where that line is. but i think there is scope for preempting a lot of the state legislation now. >> okay. thank you very much mind ti. the ranking member recognized for five minutes. >> thank you, mr. chairman. mr. kennedy, in your testimony, you touch on this issue but i'd like to hear more on it. there's a level of complexity inherent in operating a business that straddle the boundary between wage employment and self-employment. what can be done specifically in tax law to overcome these challenges? is it creating a new hybrid definition of an employee or amending the irs safe harbor rule? >> i -- i mean, my personal sort of inclination would be to amend
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the rule to create a brighter line between, you know, employee -- where a particular law applies and where it doesn't apply so people know which side they're on. i think you could also for people who only make a little bit of money on these platforms you could raise the threshold so they don't need to -- they still need to report the income and pay taxes on it but don't need to make, say, quarterly payments. so i think there are two hopefully minor reforms that would make a difference. >> thank you. and miss bruckner, there has been some concern from traditional brick and mortar businesses about the emergence of the sharing economy business model and how it affects fairness. while i do not advocate one business model over the other, how do we ensure that actions taken to foster entrepreneurship
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through new methods do not disadvantage businesses that invest time and money to conform to existing regulations when classifying their workers? >> i think that the first thing that you can do is promote understanding of what your tax filing obligations are. because people view unfairness when they think that other people aren't paying their fair share. so if we take actions on outreach and education, on what income you need to pay taxes on and really promote what your tax filing onbligations are then you're creating an opportunity for people that actually pay their fair share and creating transparency and making sure that folks be they in a sharing economy or working for a brick and mortar business are both paying their fair share. >> mr. reed, do you have any comments on that? >> well, i think that -- i think what we all have seen, what the studies have shown from miss
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bruckner and mr. kennedy, a standalone entity is almost nonexistent. sure, there's a corner bodega that sells ice cream and sundries that will probably be very isolated. in nearly every other business, you're going to have a mixed economy. i started a bike store when i was younger. i still own part of a bike store. we sell part of our equipment online. we get rid of stuff we didn't sell in the area online. use services like ebay, et cetera. even your corner independent bike store is probably going to have an interaction in the sharing economy. and so while it's important to preserve the rights and the capabilities of those bricks and mortar store, we have to understand that we are merging into an always connected, always online and candidly, always selling economy. >> mr. kennedy, your views on that? >> yeah, i think -- i mean -- >> mike. >> i mean, i think somebody
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who's paid a million dollars for their medallion in new york probably feels, you know, a bit aggrieved that uber is competing, but i think if you look at it objectively, uber is a better model. they're reducing prices. they're serving neighborhoods that traditionally haven't been served so well. and the riders seem to think it's a better experience. and so the answer, i think, is not to go backwards into the traditional model, but to free up, you know, the traditional taxicabs and brick and mortar businesses so that they can participate more in the online experience. and you see the taxicabs actually, you know, starting to put out their own apps now. and so, you know, reforming some of the traditional laws and traditional regulation, i think, would be a more appropriate response. >> thank you. miss bruckner, if workers are
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found to be misclassified, what are the current penalties under the tax code? would they then be penalized under other laws like the fair labor standarddard act as well? >> our research did not look at the misclassification legal implications. we think that is part of the debate that impacts a very small segment of the overall sharing economy and that there are much larger, broader implications for the growing numbers of independent are ti independent contractors, freelancers in general. existing tax compliance challenges of those folks operating as self-employed small busine businessowners generally. there are absolutely miss classification that occurs in every industry at every pay grade and there are extensive legal ramifications bu we focus on the smallest of the small businessowners and what their tax challenges are.
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>> thank you. >> gentlelady yields back. thank you. gentleman from new york, mr. gibson, is recognized for five minutes. except he's not here. who's next on our side? okay. the gentleman also from new york, mr. hanna, recognized for five minutes. >> this is a fascinating topic. the underground economy, as you know, is growing. part of this whole conversation has to do with noncompliance. you said $2.5 billion of unreported potential income. and yet there's unanimity that the tax code, if not encouraging this, isn't caught up to the issue. so you have the government's desire to make, eliminate the notion of independent contractors so they all fall under the ospisese of the company helping them opening these businesses, right, and yet that doesn't solve the problem.
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and i'm interested that -- that there is an issue there. i mean, the irs to go out and people aren't sending 1099s because they don't require them. so who's really breaking the law here? are they looking at their credit card threshold? and if they are, how would they even know it? i mean, let's face it. so people are saying uniformly that people aren't complying, implying that they're uninformed, but we all know we have to pay taxes. we all know that if we have income, we owe somebody something or at least a report saying we fell under certain -- so i don't buy that people don't know that they owe something to someone. and i do think there's an -- miss velazquez said there is a subtle incentive to make everybody a private contractor because look at what you avoid. the whole fica issue.
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the health insurance. all those things, you know. so i think it's a really complicated issue. i'm interested in any response you might have, miss bruckner, because it's not -- i mean, who wouldn't want to be like rabbit saying these are all independent contractors and we're not responsible for anybody? that would be ideal for you, you just collect your percentage and move on. but yet it's a problem. it's a big problem. yes, mr. reed? >> i actually -- having been a small businessowner and having been on both sides of this, i'm not sure i would completely agree with the concept that everybody would love to have independent contractors. as somebody who owned a small business, one of the reasons that i hired people to be employees is i could count on them to be there. as i pointed out, lots of drivers drive for both uber and for lyft so you essentially have your employees in a state of competition with you. right? you're having to constantly offer incentives, find new ways
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to entice them to stay and to not jump ship. one of the advantages that you have when you own a business and have employees is there's an opportunity cost to having them there but it allows you to do different -- >> i'm not arguing with -- >> i think we're all making that decision on kind of an ongoing -- taskrabbit has employees, don't you? >> thank god i'm one of them, right? >> exactly. >> but the premise is the same. i agree with you. i've had hundreds of employees myself. i'm new to this job. so i get it. but we have to find a way to disincentivize the companies from doing that inappropriately and at the same time find a way to help people pay what they're owed because the irs can't run around chasing down everybody who owes them $500. >> i don't argue that we need to create the right set of incentives for both companies
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and for 1099 or taskers as we call them. contractors to have the right benefits and right access to whatever they choose. but legitimately right now, our taskers are telling us the one thing they value most is flexibility. and in order for us to provide that flexibility, they need to be 1099 contractors. one of the gating factors to however them filing their tax or receiving training in any other regard, whether professional services, learning to be better handymen, understanding how to market themselves, is this enabi inability to work directly with them around training. that's ultimately one of the barriers to the issue we're talking today and more broadly around how to interact with this workforce in a meaningful way. >> you agree with that, mr. kennedy? >> yeah, and i would also -- >> mike. >> sorry. i would also add that if you're talking about withholding taxes
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or providing, say, health care benefits, the evidence, economic evidence is that the employee ultimately pays for that in reduced take-home pay, so it's not really the employer that's benefiti benefiting. it's possibly the employee. and so i think there is -- one of the reasons i suggested the, you knows, the temporary exemption is because i think there is real scope for the companies to come forward in certain areas and have a closer relationship with their employees and tax is one of them because all the records are electronic so providing the irs with the information is very, you know -- >> sure. >> but the companies are afraid that this will come back to bite them later in a form of a disgruntled worker saying they were misclassified or an agency coming in saying you didn't do this or that. >> sure, with workmans' comp --
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>> an additional minute. >> thank you, chairman. i get all that. but just one thing. the affordable health care act. regardless of how you feel about it, it impacts it in an enormous way with people in marginal positions anyone come. the potential to have the cost of that -- from what we read all the time. thank you, my time's expired. >> gentleman's time is expired. the gentlelady from california, miss hahn, recognized for five minutes. >> thank you for holding this hearing. i agree with my colleague, mr. hanna. this is an interesting topic and certainly there are a lot of changes underfoot in how small businesses are operaoperating, they're going to be paying
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taxes, how they impact the consumer. so it is really interesting. one of the things professor bruckner, i wanted to ask you, because you noted in your testimony that 22% of the members of the national association of the self-employed responded that they work with an on-demand platform company like uber or airbnb. of that 22%, almost half did not know about any tax deductions, expenses or credits that they could claim related to their on-demand platform income. and while most the discussion so far has been whether or not they're paying their taxes, in general, what kind of tax deductions, expenses or credits can be claimed for those in that industry? and also, what can we do to maybe better educate this group on the availability of some of
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these savings? >> so that's a great question. starting off with the most obvious answer is when you drive for a business, in many instances, you can deduct the files that you drive. the question is, do you deduct actual miles that you drive or do you deduct using a standard deduction formula that's in the tax code? in addition, depending on where you work, if you are selling goods online but produce those goods from outside of your home, can you fatake advantage of the home office tax deduction? are there other startup expenses you might qualify for under the code to being able to expense in becoming your own small businesses? it was really surprising to us that this experience, self-identified, self-employed population wasn't aware. at least half of them weren't aware of these potential deductions and expenses and even tax credits that could apply to them which means that they could be very well leaving money on
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the table when they go to file their taxes. >> thank you. i was going to ask mr. willey from taskrabbit, i know we're talking about taxes in this session, but i just was going to have the opportunity since you're here, you know, love the business model. love the concept. you know, if only our kids would do their chores, we wouldn't have to hire taskers. but one of the concerns that i think some of us have is, you know, background checks of some of those who are now becoming taskers and coming into our homes. can you walk us through how taskrabbit vets and administers the background checks for these taskers? >> sure. so trust and safety, i think,
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holistically is clearly one of our company's biggest priorities and i think it's important to state that as we look at a variety of things that happen in our marketplace every day. clearly, us recruiting and/or onboarding taskers is something that operationally we look at every day to make sure there is the best process possible. in doing so, like i mentioned, 15,000 taskers or potential taskers a taskers apply to work in the marketplace every month. what that includes is that is the submission of a form online with basic contact information of which we then -- which includes their social security. of then which we do a background check which currently they pay for. then we, based on that process, they then come in person for a one-hour orientation to learn the processes and procedures of our marketplace as well as how to use the tasker app in order
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to answer for potential work. >> thank you. let me just also follow up, i'm running out of time, it's fascinating that we're talking about $35 an hour. i mean, that's, like, five times -- >> the federal minimum wage. >> it's incredible. and you stated that thousands of applications are coming to you really without any direct recruiting or marketing. so i'm thinking about there are particularly in the district that i represent in los angeles, you know, it's -- there are a lot of folks who are looking for work. many of the neighborhoods are low-income neighborhoods. how -- how can you reach out to some of those other communities in our country who are, seems to me, be perfect to find some of these jobs. what can you do to help people find some of these good paying jobs? >> it's a great question, actually, and we thank you for your support and the city of los angeles,s you're one of our largest markets.
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[ inaudible ] well, i don't have any comment on that. however, i think you're right, there is more potential and opportunity for us to broader outreach to have a broader portion of the market or the population find new work opportunities and we consistently support that with, one, a livable wage. that is most important to us. two, it's the flexibility because 90% of our taskers do not work full time in the marketplace. they are allowed to create other new work opportunities. i would say the third thing which is the most important is this idea of transferability of skills. if we kiconsistently train thos who work as taskers in the marketplace with broader skill sets to take on, in the future do bigger, broader things, not only does our existing marketplace benefit, but as do consumers and what we call clients to receive better services. >> the gentlelady's time is expired. >> thank you very much.
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i yield back. >> thank you. gentleman from mississippi, mr. kelly, recognized for five minutes. >> thank you, mr. chairman, the ranking member and thank this distinguished panel. i really appreciate you being here today. i'm going to kind of vary a little bit. people don't like change, governments don't like change. talking art the other comments we've heard. this is a system that works but it's different. i say the same thing with overtime rules with small businesses, what governments don't understand they try to fit into their mold, their box. it doesn't work in that box. so they got to adapt to the sharing system and to the small businesses and not try to adapt them to the rules that apply to everyone else. if we do that, if we try to force small businesses or sharing economies to be a part of the regular tax process or agency process, what happens is you fail because we try to insert ourself. we need to change, not ask you to change.
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what i find interesting is the sharing economy is very tangible. the other thing that i find very interesting is it applies to people either as a second job or a supplemental income not as their primary, so a lot of times they are paying taxes in a primary job. they have health thecare in the primary job. mr. reed, i think you hit it, flexibility is the key. we absolutely have to be flexible. most these people are students. they're retirees. they're stay at home moms. they're soldiers' wives. they're people who may be moves l ing locations or tied to a location and other duties so flexibility is the most important. what canby as a small business committee do to make it easier to make sure the people who want to and should pay taxes pay them? also we keep open the flexibility. i'll start with you, miss bruckner. >> i think holding a hearing on
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this is a good start. first and foremost, we need to be educating other members of congress about the sharing economy and about the fact it's not just a fimillennial phenome. this is affecting all sectors of our population and as you point out, generally these are people that are doing this part time or as a secondary source of income and the hassles that they have to face complying with their tax code obligations are something that we definitely should consider moving forward with how do we make life better for the american taxpayer going into tax reform? >> and any other comments from the panel? >> i think that one of the key elements that we've touched on considerably is ensuring that the irs allows us to provide the training so that we get these people to understand their obligations. i think it's ironic, here we are having a panel about how do we get people to pay their taxes
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and as mr. willey talked about and our members discussed, we are concerned that in order to make it easier for them to understand how to pay their taxes, we might actually destroy the very business model l that allows them to have that flexibility. so if there's one conundrum out there that exists, it's the idea that we could find ourselves in the wrong classification trying to help the irs do their job. >> and very -- this is one of those things. i think the sharing economy is great just like i think small business is. sometimes i think people are threatened and rather than try it get better at what they're doing, you know, if you're getting your tail kicked, you don't make the other team change the rules or keep playing. you get better at what they're doing and you steal or copy or whatever you want to call it and you get like them. i'm going to go back, professor bruckner, while the federal government works to catch up to assist in the needs of a growing sector of the economy, is there anything this committee or very agencies involved can do educationally to inform taxpayers while we work to make
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the guidance more clear, here's what we should be -- what should we be doing in the meantime? >> i think that the number one thing that the irs can do is start working through its relationships with third-party preparers and with tax preparers educating them because in many instances, they don't even know how to advise customers that come in -- that come in and need help with their taxes related to their sharing economy income. i think leveraging those third-party relationships and increasing outreach and education to even tax preparers and folks that are engaged in that industry would be a great start. >> and then finally, i may not -- mr. reed, i'm going to let you comment if there's time. one of the things is sales tax is a big issue. and i think we can't just say it's better where it originates or better are it ends up because a lot of localities and county governments and county municipalmunicipal municipalties rely on the sales tax to have things that service
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their people. for service, police and fire department. i think we need to have a healthy discussion on that to determine what the best answer is. with that, i yield back. >> thank you. the gentleman yields back. the chair would be remiss if i didn't mention an irony of this. we're talking about the irs here this morning, what we need to do to adjust and the me that i left to come here currently, the topic there is whether or not we should impeach the irs commissioner right now. so it's just -- kind of boggles your mind. but that being said, for the record, we will now recognize the gentlelady from north carolina, miss adams who is the ranking member of the investigations oversight and regulation subcommittee for five minute g minutes. >> thank you, mr. chair, thank you ranking member velasquez for hosting the committee. the sharing is a new aspect of our economic system we must pay close attention to in order to properly provide effective oversight with regards to worker
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classification. miss bruckner, to start, worker classification is nothing new in labor law. in fact, last year, arizona, forced construction companies labeling workers as independent contractors instead of employees to pay more than $700,000 in back wages and damages. so what makes the sharing economy harder to regulate than the traditional workforce? >> i think what's different and unique about the sharing economy, when you look at it for tax policy purposes, you're not just looking at companies like taskrabbit or lyft or uber who raise some of those issues or that's where the debate has been. we also look at it in terms of etsy, airbnb, folks who generally you wouldn't even think to put in the same sentence as a misclassification debate. it's much bigger when you look at just how these people are earning income and file or obligated to file for u.s. tax purposes. it's a different question and that's what our research endeavors to point out.
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>> okay. there are quite a few federal and state laws that define the employer/employee relationship and that of an independent contractor. is it possible that a worker could be deemed an employee under one law and an independent contractor under another? >> i think that that possibly could happen, but i think that misclassification happens in all different kinds of industries and in all different types and circumstances. those are issues that we don't address specifically in our research. we focus really on how the existing tax code isn't working for american taxpayers that are just trying to earn some income in the sharing economy. >> so, thank you. so would you have -- would you know if there would be tax implications for situations like that? or -- >> i would certainly venture to guess there are tax implications but i by no means cover that in either my testimony or in the report we put out. >> okay. what role does technology play
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in blurring the line between an employee and an independent contractor, you think? mr. reed? what about you? >> oh. i think it's safe to say, and i have suspicion that all of us would agree that the technology we have is what empowers the sharing economy. the ability -- let's use location as the most obvious example. without the ability to know the location, taskrabbit can't figure out who to assign, who can get there quickly, how long will it take them? the entire function of the sharing economy works because i can take up those spaces in between your other job, your other task, when you drop the kids off for daycare, and i can make it work both in space and time. so without the power that your smartphone provides, we don't have the sharing economy. >> would anyone like -- would you, mr. wille wher erkwilley? >> i would completely agree with
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that. taskrabbit was founded in 2008 which is the first year the iphone 1 launched. i don't think there's any luck in that planning. i think technology certainly empowers us both from matching taskers with what we call clients or consumers but also building supply and demand in order to do this in a realtime, high-quality experience. both of those things are simply empowered by mobile technology. >> thank you. mr. reed, the sharing economy model relies on the infrastructure of the platform. what should these businesses do to ensure that their infrastructure's growth keep pace with that of the company? >> well, we would always encourage -- we would always encourage the companies to figure out ways to make it more enticing for the -- for the people providing the service to be part of it. and that gets down to training, providing easy access to the client that you need to find. i thought it was interesting
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that miss bruckner brought up ebay, etsy, this entire universe of physical goods and the sale of physical goods. so the key elements of platforms need to fro void are easy access to customer who wants their service. the second thing is a trustworthy space. if f there's one thing that drives our ecosystem to success or failure is the trust the client puts in it. do i trust the person giving me a ride? how do i know the tasker who comes to my house should be let in the front door? creating a platform that enables trustworthiness and the ability to get those two merged together is a critical, critical element. >> thank you very much. mr. chair, i yield back. >> thank you. gentlelady's time is expired. want to thank the witnesses for being here today. and i just have one final question, mr. willey. i'd like to ask you this. i noted you have an office in london.
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i happen to. be on the foreign affairs committee. how is the u.s. doing compared to the rest of the world on the shared economy? are we ahead of the game, behind, about where we would want to be? if you want to comment on how things are going around the globe. >> i can comment on london and the uk. as it relates to our business, there's no doubt that the united states is ahead of where the rest of the world is in terms of the sharing economy and its adoption of its citizen s the sharing economy and its adoption of its citizenervices. that said, the fastest growing emerging markets in the world in the sharing economy are not in the united states. specifically for us, london is our fastest growing market. there are different dynamics in these markets, whether it be around taxes or health care that create nuances as to how companies go to market and how do they work with their taskers within their marketplace that create actually new opportunities for companies like taskrabbit. that said, expansion is one, a
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very interesting and i think new opportunity for companies like taskrabbit. that said, it will be done at least by us very carefully as we understand the marketplace dynamics. >> where is the cutting edge around the world? is there one or a couple countries that are particularly ahead of the game? >> i think when you look at population density, you have to very clearly see that those markets have obvious opportunities simply based on the fact sharing economy companies need to match supply and demand in ideally very high population cities. so those cities which china, india, are areas where i think the cutting edge of the sharing economy is clearly looking to grow, that said, like i mentioned those nuances for those cities and for those countries are very different than the u.s. >> yes? ranking member is recognized. >> thank you. i'd like to ask a follow-up question. when you mention health care and
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taxes, it's related to london or just other countries, and why? >> it's related to other countries specifically in london. forgive me, i'm not an expert in u.k. or -- and i'm not a lawyer. but i know when we look at our market place in london, even our services or what we call our mix are different. our number one service in london is handyman services. which is a different number one service than, say, we have in los angeles or that we have in san francisco. and part of that is based on, one, the city dynamics, and two, also based on those available and will and wanting to work in that capacity. a lot of that has to do with health care and the availability of it and it also has to do with general sort of city service behavior. we see a lot of nuances between the cities which is why, when we look at deploying task grab it
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globally, those are cautious and careful decisions that we need to work in partnership with federal and state or country governments to do so with always the benefit and the welfare of our taskers in mind. >> thank you. >> thank you. yielding back. in closing, i would comment that we've heard a lot of evidence here regarding the current tax law and outdated irs policies that are ill-suited to the bunch onning economy and those that are participating. it is clear we need to figure this out and acust accordingly. i'm pleased that we've undertaken the task of the possible solutions. the rise of the sharing economy is a very exciting development and we need to ensure that our outmoded legal system doesn't strangle this growth in infancy. we look forward to working with
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all of you to modernize our system to boost the economy and increase employment opportunities for many americans. and i would ask you unanimous consent that you have five days to submit statements for the record. without objection so ordered and if there is no further business could to come before the committee, we're adjourned. thank you. [ proceedings concluded ]
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[ proceedings concluded ]
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[ proceedings concluded ] while congress is on break this week, we're going to bring you american history tv
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programming normally seen on the weekends here on c-span 3. tonight the 50th anniversary of the vietnam war with filmmaker ken burns and john kerry who is a vietnam vet. american history tv tonight at 8:00 eastern. c-span's wash journal begins a two-day look at issues along the u.s.-mexico border. and they recently visited the town of laredo, texas, and learned about trade across the border there. throughout the laredo field office, $166 billion in goods imported in fiscal year '15, over 3 million commercial conveyances. here at the laredo port of entry alone, a little over 2 million trucks, $115 billion in trade. that translates here where we're
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at today to a little over 6,000 trucks aday are coming through this lot. customs and border protection employed layered enforcement strategy that involves the advanced information that is transmitted to us. we use that information to identify the higher risk conveyances that we want to dedicate our resources to. it is also -- to really, it is about -- even before the shipment gets to the border, it is about working with our stakeholders and other government agency partners, our trusted trade importers, custom trade partnership against terrorism partners to make sure they are employing very secure controls throughout their import process. and then the shipment gets here to the compound and we risk assess it and we determine what needs to be examined. the shipment is released and then even after the shipment is
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released our job hasn't ended. we till toin to look at -- we still continue to look at paperwork, the post-entry review to make sure we are collecting the proper retch and makes sure the goods are in compliance with u.s. government rules and regulations. cvp enforces the laws and regulations of 40 other federal agencies. last fiscal year laredo field office, $271 million in duties collected. >> are user fees different? >> user fees are a separate fund. and that goes -- the master, the conveyance, the trucker will pay. and that has to go into the general -- kind of our general funds. it helps to pay -- off-set the cost of our examines and other wise, our operations. >> the money from duties, that goes to the treasury. >> the duties go to the treasury, that is correct. it goes into the general coffers. so we see a lot of different commodities, some of the highest
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volume automobiles, medical devices, computer and telecommunication equipment. i would also point out we're seeing more and more agricultural goods. throughout the field office, especially down in the rio grande valley here in laredo as well, so we see a lot of perishable fruits and vegetables coming across as well. we have textile products as well so we see quite a bit. but the automobile industry and parts that support the automobile industry are our largest commodity coming in, and value. >> does it ever slow down? >> not really. there are some reasonal peaks and troughs but it is steady throughout the year. when the holidays roll around, everybody kind of takes a chance to take a deep breath. but even -- i was here --
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reported last summer and even over the christmas holidays, we still had significant volume coming across. so basically it is a 365-day a year operation. >> c-span washington journal is live from the u.s.-mexico border in laredo, texas, for two days starting tomorrow. the moneyaging director for breitbart texas talked about illegal immigration in the area. local immigration lawyer nelly vieh elma discussed citizenship and deportation laws. and dallas morning news mexico security chief examines the impact of mexican drug cartels. thursday's focus is trade. we'll discuss trade across the laredo border. congressman henry cuellar talks about how trade benefits laredo and the country and bob cash
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from the phoenix fair trade coalition and a nafta critic looks at the impact on jobs, from southern texas to mexico. washington journal live from laredo, texas, wednesday and thursday starting at 7:00 a.m. eastern on c-span. this week with congress in recess, we bring you programs in prime time from american history tv. which airs each weekend on c-span. just ahead, a conference on the vietnam war from the lyndon johnson presidential library. authors and historians discuss how the war divided the united states and how the conflict was covered by the media. then pulitzer prize winning photographers talk about the war-time work in vietnam. later remarks from the secretary of state john kerry. c-span wash journal live every day with news and policy issues tha

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