Opposition to taxi medallions unites liberal and conservative policy groups. In September, the Competitive Enterprise Institute issued an open letter declaring their opposition to the proposed legislation, co‐signed by other influential right‐wing groups including Americans for Tax Reform, FreedomWorks, and the Reason Foundation. Left‐wing groups such as the Center for American Progress, the Urban Institute, and the Brookings Institution have also published tracts condemning the proposal.
Their objection is simple: a medallion system would strictly limit the number of taxicabs allowed to operate in the city, ultimately raising prices for consumers, increasing wait times, and limiting service to a few high‐traffic areas of the District. In effect, the proposed medallion legislation is designed to function as a cap‐and‐trade program for taxis, but with no high‐minded public purpose.
Drivers, as opposed to the large cab companies, are up in arms against the proposal. While there are roughly 8,000 cab drivers currently operating in the District, the legislation caps the number of medallions at 4,000—which means that at least half of the city’s drivers will be out of work or forced to share a medallion with another driver. Medallions will also negatively affect owner‐operators who are unlikely to afford—if New York City is any indication—the exorbitant price to which medallions will eventually rise. These circumstances would run owner‐operators out of business, pushing them to work for larger companies where they would be forced to either rent taxis at a premium or drive for the cab companies at lower wages than they would otherwise earn on their own, with the lion’s share of the profits going upstairs to the medallion owners.
The munificent D.C. City Council suggested that a medallion would serve as a “retirement account” for drivers, allowing them to finance their golden years by selling their medallions to other cabbies. But the council somehow overlooked that drivers would first have to finance buying the medallions.
Stench of corruption | In essence, the D.C. Council would be passing a law that would create a valuable property, its value extracted entirely from consumers—and then turn around and give this property to politically connected quasi‐monopolies that control the industry.
Unsurprisingly, the bill stinks of corruption. The Reason Foundation reports that the bill was written by John Ray, a former city councilman and current lobbyist for the cab industry employed by Jerry Schaeffer, whose family owns 14 D.C.-area cab companies. It was then introduced by Ray’s former employer, Councilman Harry Thomas (who resigned earlier this year and pled guilty to embezzling more than $350,000 in city funds), and—naturally—former D.C. mayor and current councilman Marion Barry, whose ethics problems are well known. The original sponsor was city transportation committee chair Jim Graham, who ultimately left the committee after his chief of staff was convicted of taking bribes from a taxi company that was to receive special treatment from a previous medallion bill.
As the legislation heated up last summer, the Washington Post revealed that city mayor Vincent Gray’s 2010 election campaign had accepted $60,000 in illegal cash donations from cab companies. Around the same time, the Washington Examiner reported that Gray’s campaign had also failed to report hundreds of free cab rides given to deliver D.C. voters to the polls during the Democratic primary—which in D.C. determines the outcome of the general election. Incidentally, taxi lobbyist Ray’s primary justification offered for the legislation is to eliminate corruption from the system.
Proponents of the D.C. legislation have not had the chutzpah to claim that it is intended to benefit the consumer. That is to the proponents’ credit, because the bill will make life much worse for those who take taxis. If the legislation becomes law, consumers will pay higher prices while being serviced by many fewer cabs, with many areas of the city becoming underserved. The benefits of a medallion system will accrue almost entirely to the Schaeffers and other owners of the major taxicab companies in the city. One would be hard‐pressed to find another piece of legislation this side of subsidies for professional sports stadiums that does as much to transfer wealth from average consumers to wealthy, politically connected entities.
