Brave Taxi Entrepreneurs Versus the Nasty Taxi Magnates: D.C.'s Taxi Medallion Bill

Brave Taxi Entrepreneurs Versus the Nasty Taxi Magnates: D.C.'s Taxi Medallion Bill
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Here’s What’s Happening

Washington, D.C., has long been the bosom of a land steeped in traditions of freedom and liberty, where a man can work his way up to an

independent, self-sufficient lifestyle with nothing more than sweat and smarts. For generations it has been an enclave of entrepreneurship for a special breed of professionals—the taxi drivers. But now the District of Columbia Taxi Commission (DCTC) wants to impose a medallion law on these taxi entrepreneurs.

Well, Guess What…, taxi, danjaeger

A recent article by Jim Epstein and Nick Gillespie on reports that some shrewd soul has come up with an idea to yank additional tax money out of cabbies: If they want to continue operating their taxis, they have to buy a metal plate that attaches to the vehicle—hence the name medallion. The cost will be $5,000 per medallion for the independent drivers: What’s up with that?

It’s bad enough that the DCTC is imposing this new tax upon independent drivers—in effect, bullying them into forking over a percentage of their daily profits. That scenario reminds me of nothing so much as the world’s oldest profession. Although the prostitutes most definitely own everything they sell, they are taken over by pimps who force them to accept protection, and in exchange the prostitutes have to turn over a portion of their earnings. The pimp doesn’t even care how much the prostitute makes; he just wants his cut up front.

The same can be said of the DCTC. It has arbitrarily set the price of $5,000 per medallion for each independent cabbie. It doesn’t matter how much the cabbie makes per day, week, month, or year: He is obligated to pay that rate. Actually, prostitutes have it better than cabbies, because at least they do get some protection in exchange for what they pay. The taxi drivers get bupkis.

It’s Always About the Money

The taxi magnates will pay magnanimously more for their medallions—up to $10,000. But hold on to your meter for just one minute! The taxi magnate actually gets a discount over the independent cabbie. Let’s get out our stubby little pencils and do that math on that scenario:

  • The independent cabbie begs, borrows, and steals to come up with the sum of $5,000 to pay for a medallion. If he uses the medallion 52 weeks per year, his cost per week amounts to just under a hundred bucks. You can break that down further into cost per day, at $13.74. So before the cabbie even begins to earn enough to pay overhead such as gasoline, vehicle upkeep, insurance, and licensing fees, that amount comes right off the top of his earnings and goes toward his medallion expenditure.

  • Now consider the taxi magnate. He pays $10,000. Then he turns around and rents that medallion out to drivers on all three shifts around the clock. Each one owes him $13.74 per day. Multiply that by three, which equals $41.21 per day, and extend that throughout 365 days per year; the taxi magnate recovers $15,041.21.

  • Since few drivers will be eligible to buy the medallions, and only a small percentage of those eligible will be able to afford them, the bulk of medallions will belong to taxi magnates. Imagine if one of these types owns a company and snatches up a hundred medallions, his cost is a million bucks. Once he rents them out to his downtrodden drivers, he realizes a cool $1,504,121.88, a return of over 150%. That’s what I call good investing!

Who Thought Up This Scheme?

Now, take a guess what person or what kind of person would come up with such an idea, who would it be? Maybe it would involve someone, jmtorres

who owns a lot of taxi cabs. Or maybe a politician with an unsavory reputation could be involved. Or maybe someone who gets involved on the coercion—er, the advice—of his lawyer.

If you guessed that all three could be involved, then you win! It’s no big surprise to discover that the idea for this bill came from taxi magnate Mr. Jerry “Greedypants” Schaeffer, who owns several D.C. cab companies such as District Cab and Consolidated Cab. After all, if he is such a big-shot cab owner, why shouldn’t he stick it to the little-shot cab guys?

He paid a lobbyist and former city councilman named John Ray to write the bill, and then Ray, who works as a lawyer (uh-huh), somehow enlisted one of his clients, councilman Harry Thomas, to introduce the bill to D.C. City Council. Guess who else bought into the idea of the bill: None other than the Original Crack-Smoking Mayor, Mr. Marion Barry, who also sits on City Council. (What’s wrong with the voters in D.C.?)

This is not the first time a politician tried to get a medallion bill passed—D.C. Councilman Jim Graham tried it but withdrew the bill when his chief of staff was filmed accepting a bribe from—big surprise here—a taxi magnate!

Read the Fine Print

In case you missed the finer points in Epstein’s article, here’s a recap—plus a few extra facts that I discovered by reading the proposed medallion bill:

  • Taxi fares always rise by about 25 percent in cities where medallion bills have already been enacted.

  • Independent taxi drivers fear that taxi magnates will use their power over drivers to create artificial cab shortages, thus driving prices even higher.

  • The first round of medallions goes out to owners of low-emission and wheelchair-accessible vehicles, and then the rest go only to those who have operated a taxi within the District of Columbia since the year 2006. The owners must prove that they have paid income taxes in the District of Columbia for the past five years! Cabbies who have been driving for four years or less will not be eligible, nor will those who live across the Potomac in Virginia or Maryland.

  • Buyers of medallions do not have to be licensed cab drivers—hence the loophole for taxi magnates.

  • Cabbies who obtained their vehicles through someone other than a D.C. vendor—say if Uncle Charlie helped them out—cannot purchase medallions for those cabs.

  • Taxis that will bear medallions must be painted black and decorated with an emblem to be determined by the DCTC.

  • Two million dollars will be set aside for up to 150 qualified cabbies who have been in the business for at least ten years, to help them with purchasing medallions or vehicle repairs. The bank that manages this fund will be chosen by the mayor.

  • The mayor will also appoint a three-person industry board to oversee the medallion program, each of whom will be compensated (pay grade “17” for the head of the board, whatever that is).

  • There is a renewal policy for the medallions, but the details were not discernible by this writer.

Cabbies already pay a whole slate of fees to go into this business—commercial licensure and vehicle registration, equipping the vehicle with a meter, buying insurance, vehicle upkeep, and training or safety courses, all for an opportunity to own and operate an independent business. In many cases a whole family works together to make their cab business a success. Why should they pay more fees, just to pay off a bunch of rich fat cats? It’s just like prostitutes getting bullied by their pimps, if you ask me.


The Medallion Bil of 2011:

Images, nem youth (this photo is actually from New York, but I love the artistry!), danjaeger, jmtorres