Pur Autre Vie

I'm not wrong, I'm just an asshole

Sunday, September 16, 2018

Life Is Taxing

A quick note about how hard it is to think about tax policy.

I am a Citi Bike member, meaning that I can check out a bike from a dock, ride it wherever I want, and check it in at another dock. I pay something like $180/year for this privilege, but beyond that each ride is free (as long as it lasts under 45 minutes). I love it.

I also participate in the Citi Bike Angel program, meaning that I earn points by checking out bikes from stations with excess bikes and/or checking bikes in to stations with bike shortages. The points can be redeemed for free weeks of membership and other prizes. (I have already earned a sweet-ass pin, and at 500 points I will earn the coveted white Citi Bike key. Normal Citi Bike keys are blue. I scarcely want to mention it, but at the 2,500 point level I will qualify for a Citi Bike key made of steel. Steel!)

Anyway in some sense I'm doing work for the bike-share company. In fact they pay people to move bikes from crowded stations to uncrowded ones. When they do, those people earn income that is taxable at the city, state, and federal level.

I am also getting something of value for doing the same thing, albeit on a smaller scale. But my compensation isn't taxed at all. In fact it's negatively taxed, because whereas my initial year-long subscription was subject to sales tax, the additional weeks I've earned as a Citi Bike Angel are not.

Should I have to pay income tax on my Angel rewards? Maybe. But shouldn't a business be able to price its product differently depending on how costly different customers are, without being deemed to have given some of its customers taxable income? Lots of travel companies (airlines, bus lines, etc.) will charge you less if you buy a non-refundable ticket, since it helps them anticipate demand, etc. They will also charge you less if you don't bring any luggage, or any extra luggage beyond a specified number of free bags. But surely those lower prices shouldn't count as taxable income. It's the same thing with Citi Bike. People who use the system in the way I do are less costly to serve than average system users.

And yet! Without the Angel program, Citi Bike would have to employ more people and pay more income tax, and so by making the Angel rewards tax-free we are (at least in a small way) inducing Citi Bike to change its behavior.

What I think this shows is that if you think about anything too hard, you will identify conceptual difficulties that make you think the current arrangements, however sensible, are in some sense arbitrary.

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