Senator Rubio: A Vote for the On-Demand Economy
The theme I’ve chosen for my campaign is: “the New American Century.” For me, this isn’t just a slogan or a bumper sticker; it’s a description of the stakes of this election. I believe before us lies a choice between the past and the future, and I want to take every opportunity to describe to our people how bright our future can be. That’s exactly why I gave a speech Tuesday morning in New York about the on-demand economy, which is the emerging economic platform allowing consumers and professionals to connect directly with one another at the tap of a finger.
The most obvious examples of the on-demand economy are companies like Uber and Airbnb, but right behind these are thousands of innovative startups. The on-demand platform is one example of the ways the American economy is fundamentally transforming before our eyes. Yet, while our economy is rapidly changing, our government is staying the same. Our innovators are left to struggle against a tide of antiquated policies holding back growth and opportunity.
In attendance at the event Tuesday was an entrepreneur named Oisin Hanrahan who knows all-too-well the challenges our government poses to innovation. Oisin started an on-demand company called Handy that allows consumers to connect directly with home cleaners, handymen, plumbers, and other home service professionals.
Companies like Oisin’s not only make life easier for consumers but also spark upward mobility for workers. Through Handy, professionals without the resources to start their own businesses can now have all the independence of self-employment plus the customer base of a large established business. Professionals, who use Handy, set their own hours, checking into the app whenever they have time to take on a job, and signing out when they have other obligations. Many workers use this flexibility to pursue higher education, work other jobs, or spend time with family.
In spite of all these benefits, government prefers to obstruct and antagonize the on-demand economy rather than protect it. Handy and companies like it face numerous obstacles to growth. For example, because of our antiquated tax code, they only have two options for how to classify the professionals who utilize their services: either as full W2 employees or as 1099 independent contractors. But neither make perfect sense.
If Oisin classifies the workers as W2 employees, much of the flexibility that makes working with Handy so appealing would disappear. So, instead, he makes sure the relationship complies with the 1099 independent contractor requirements, but this causes other complications. For instance, the company can’t provide training, can’t make recommendations based on customer feedback, and can’t even ask its contractors to wear a shirt or uniform with the Handy logo on it.
On Tuesday, I discussed some ways to make the tax code more welcoming for on-demand companies, such as maintaining the “physical presence” standard for taxation of online purchases, stopping discriminatory taxation of digital goods and services like app downloads, and ensuring the Internet remains tax-free. I also discussed the possibility of a “dependent contractor” classification for workers, which would be a middle ground between the W2 and 1099 classifications.
On-demand companies aren’t hurt only by our tax code. Just last Friday, the chairwoman of the Federal Trade Commission said the on-demand economy would require “targeted regulatory measures,” but all the best innovation in our economy is happening in the unregulated space, which is why I will place a cap on the amount regulations can cost our economy each year. I will also require federal agencies to include an analysis of exactly how each proposed regulation would impact competition and innovation.
Discovering what exactly government can do to stand behind the on-demand economy rather than in its way is an important task before us, and I was excited to join the conversation on Tuesday.
Here’s one thing I know for sure: We have to change the way the political establishment in this country thinks about the new economy. Right now, they recognize that it doesn’t fit our current tax code and our current way of doing things. So,they ask: How can we force the new economy to adapt to our old policies? But this is wrong. I’d rather ask: How can we change our old policies to adapt to the new economy?
That has always been the American way. We are a nation unique in the world — a nation founded on the idea that government doesn’t get to choose what our economy looks like; the American people get to choose. And the American people have chosen a convenient, fast, tech-driven economy — one with direct lanes of access to the products and services they need. I believe it is time for the government to catch up with the realities of this new economy. If I am given the honor of serving as president, that’s exactly what I will see done.