Friday, April 3, 2009

Gavin Newsom Tries to Shaft the Medallion Holders

Mayor Gavin Newsom, who has fought against a business tax that he himself would have to pay, seems to have the wind at his back in his attempt to force taxicab owners to auction their medallions to pay off San Francisco's debt. In fact, a local newspaper poll showed 51% voting in favor of such a measure because the "city could use the money" while only 36% thought that the "current holders need the income."

Newsom of course has the stereotype of the greedy cab owner working in his favor. But perhaps more important are innumerable newspaper articles stating that medallion holders make $70,000 per year just by leasing out their taxies

Sounds like a lot of money, doesn't it? Especially for a bunch of lowlifes.  I kept running into this figure over and over so I decided to do something that local "journalists" have clearly never done themselves: I researched the subject.
  • I asked several medallion holders about their incomes and they all said that they were coming up about $50,000 short of the factoid. When I asked them what they thought had happened to the money most of them didn't have a clue but one opined that Officer Makaveckas might somehow have gotten his hands on it.
  • Seriously ... the $70,000 figure is arrived at by simple arithmetic. The leasing rate for a shift averages about $100. There are two shifts per day and 365 days per year = +70,000.
  • The problem with simple arithmetic is that it's too simple. What is needed here is a little simple subtraction. The $70,000 is a GROSS: before the taxicab is bought, before insurance, before paying for the property on which to store the cab, before maintenance, before the property taxes, before the salaries for bookkeepers, accounts, lawyers, dispatchers, mechanics and other expenses are taken out.
  • The medallion holders usually let the cab companies take care of the above details and split the money with them for the right to lease out the cabs to other drivers. The medallion holders average about $20,000 a year from the split. I don't know the companies' share. 
Now $20,000 might be a lot of money in San Francisco Del Mar, Mexico but in San Francisco, California it's barely enough to rent a studio apartment. That's why 85% of the medallion holders also drive cabs long hours themselves, bringing their yearly total up to $30,000 to $50,000 - which might get them a one or even a two bedroom rental but will never be enough to buy a house. This after working for at least 15 years in one of the most dangerous jobs (cab drivers are more likely to die by homicide then policemen) there is. By comparison:
  • San Francisco policemen and policewomen earn  $75,868 to $101,556.
  • Firefighters base pay averages $54,000.
  • Muni bus drivers get a base salary of $56,000.
  • AC Transit drivers start at $40,560.
  • BART drivers make $64,296.
  • All these groups have medical benefits, paid vacations, sick leave and retirement benefits.
  • The benefit package at BART is worth over $29,000 per year.
  • Most of these people could also  work overtime -  at least before the eco-tsunami hit.
The medallion holders:
  • Have no benefits of any kind.
  • No retirement.
  • Pay the city one million dollars a year in a tax on the medallions.
  • Pay the same 15% self-employment tax as regular cab drivers.
  • Will have the City of San Francisco try to take their medallion away if they become old or disabled.
Mayor Gavin Newsom, to make another comparison, regularly makes in excess of $400,000 per year and has made more than $1,000,000 in a year on at least one occasion.

You can see why a man with Newsom's sense of fair play would hesitate to pay a 1.395% business tax.

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