Recently Ed posed the question: Should Airbnb be illegal? This question resounded with me, not because I have any great interest in Airbnb. Heck, I haven’t even stayed at an Airbnb. But, rather, the question resounded with me, because Airbnb facilitates entrepreneurship.
While most discussions about Airbnb focus on the sharing economy–the idea that if you’re not using something, share it, and you can make some money, and others with a need get a discount–Ed’s particular post talks about the business side. You see, New York legislators are attempting to fine folks who advertise short term rentals. Airbnb makes the argument that this is in support of the hotel industry and will lead to people losing their homes. Ed appropriately notes that both positions are stark.
Airbnb and Entrepeneurship
The thing that strikes me more about Airbnb is the opportunity for using ones own assets for entrepreneurship with little barrier to entry. It’s a lot like reselling on Amazon. Which, while more refined, is still an area with a lot of gray area. For example, in Ed’s post, he talks about collecting and remitting hotel taxes. The same could be said about sales taxes in reselling.
Like Ed, I don’t want to see over-regulation. That requires entrepreneurs to be responsible and report their income. I would argue that there should also be a “start up period,” with respect to hotel taxes for Airbnb, and sales tax for resellers, such that folks have a year or two to become fully compliant. The idea is that it takes a year or two for folks to establish a side business. To expect them to meet all regulatory requirements of a big business, like a hotel, or a multi-million dollar reseller, right out of the gates, puts up a rather large barrier to entry. Such barriers help only those entrenched, whereas we’ve seen time and time again, that they hurt market disruptors like the sharing economy.
The sharing economy, like other niches, represent great opportunity for those with the entrepreneurial spirit. The challenge comes with attempting to have all parties play on an equal playing field. That said, one of the great things about the US is the fact that entrepreneurship is valued. As such, should be accounted for in various legal and tax calculations. Companies like Airbnb should be positioned to collect the necessary taxes, to facilitate compliance. Just the same, there should be some limited time grace period for small businesses to ramp up to a point where they can meet regulatory requirements. I think this is the same concept as in reselling, with things like sales tax. Finally, I think there needs to be personal responsibility, meaning if you generate a profit, you pay your fair share.
What do you think? How should side gigs and sharing economy businesses be treated?