In states and cities across the country, politicians working with entrenched interests have pushed onerous regulatory schemes on their residents in an attempt to quash competition and prevent the rise of the sharing economy.

Conversations with your rideshare driver or homesharing host quickly reveal the importance of the sharing economy to their livelihood. It allows people to be their own boss. It gives them a platform of opportunity to become entrepreneurs on their own terms. They can work around the demands of their family schedules, pay their bills, and make ends meet between jobs. And the joy of spontaneous personal interactions and trust placed in others enriches civil society.

While the most powerful testimonials come from the mouths of sharing economy participants themselves, a growing body of academic research shows the sharing economy is especially beneficial to middle-and lower income Americans. “Peer-to-peer rental marketplaces have a disproportionately positive effect on lower-income consumers across almost every measure,” write professors Arun Sundararajan and Samuel P. Fraiberger in an Oct. 2015 paper. Reduced barriers to entry mean the sharing economy can be “a force that democratizes access to a higher standard of living.”

A Feb. 2016 report found that the speed and ease of finding work on a sharing economy platform allows people to earn money “in a timely fashion when they experience a dip in regular earnings. This is a potentially far better option to mitigate or weather volatility, if the alternatives are to constrain spending or take on additional credit.” The report found that sharing economy participation is highest “precisely among those who experience the highest levels of income volatility—the young, the poor, and individuals living in the West.”

The sharing economy is also improving the mobility of formerly underserved neighborhoods. By a factor of five to one, residents of majority-minority areas say ridesharing platforms like Uber and Lyft “serve neighborhoods taxis won’t visit.”

Key to the public policy debate, Americans prefer a light regulatory touch when it comes to the sharing economy. According to a landmark Pew Research Center report released this year, even those who self-identify as Democrats or liberals want politicians to tread lightly. Respondents felt strongly that ridesharing platforms should not have to follow the same regulatory regime as traditional taxis, and they consider drivers to be independent contractors as opposed to employees. Respondents also felt homesharing platforms should not be regulated and taxed in the same manner as hotels. The report notes: “The clear preference for a light regulatory approach among partisans in all camps is striking.”

But some elected officials see things differently and choose to saddle their constituents with excessive regulations

Fortunately, state-based free market think tanks have been vital in defending the liberty of residents and their right to earn a living. The Texas Public Policy Foundation is leading the charge to protect property rights in the state, representing plaintiffs including immigrants Ahmad and Zarwa Maatari, who fell victim to Austin’s unconstitutional restrictions on short term rentals. As noted by TPPF:

“In May 2015, the Zaataris secured a Type 2 rental license from the City of Austin with the expectation of renting out their south Austin property and using any income to pay for the expenses of the home, to support themselves financially, to help pay for their child’s daycare costs, and to invest in their son’s future. However, Austin’s new STR ordinance has put the American Dream in jeopardy for the Zaataris, possibly forcing them to sell the property and seek opportunities elsewhere.”

In Arizona, the Goldwater Institute pioneered the nation’s strongest statewide framework (SB 1350) preventing local governments from infringing on the property rights of residents engaged in homesharing. Signed into law by Gov. Doug Ducey, the law serves as a national model for states looking to adapt their own standards during 2017 legislative sessions.

In a state rife with corruption and heavy handed local politicians, the Illinois Policy Institute has led the way in offering pro-innovation alternatives. A common excuse used by elected officials in the pocket of the traditional taxi industry is that they just want “a level playing field” – by regulating up instead of de-regulating down. True to principle, the Institute has called on the city of Chicago to reduce oppressive, long standing regulations that hurt taxi drivers:

“City Council should relax its death grip on taxicab regulations, as well. For years, city rules have made it costly and time-consuming to enter the taxi industry. Instead of imposing the same painful rules on ridesharing, the city should take a look at how it has hurt taxi drivers.”

In a booming state, the Beacon Center of Tennessee is representing a homesharing family in a high-profile lawsuit vs. the city of Nashville. The city has placed an arbitrary cap on the number of property owners allowed to engage in short term rentals, and the city abruptly told the couple — P.J. and Rachel Anderson — that they were unable to get a non-owner occupied permit when they applied for it, meaning they can only use Airbnb as long as they are living in their house full time.

As noted by the Center:

“As their family grows and job opportunities in other cities arise, they would like to buy a new house and keep their current one to list on Airbnb. But they cannot. Not only are no more non-owner occupied permits available, nothing in the law forbids current permit holders from holding them forever, effectively creating a government-sponsored monopoly that denies P.J. and Rachel the full use and value of their home.”

In advance of the 2017 session, the Center also testified at a special state hearing in favor of a statewide preemptive bill to protect the rights of hosts and guests. Thankfully, Beacon won its lawsuit on behalf of the Andersons, when a Nashville judge ruled that the city’s regulations were unconstitutional. This was the first such court case in the nation, and an important victory for property rights.

2017 will be a pivotal year in the history of the sharing economy. States have a choice to make. They can embed themselves with special interests, or embrace innovation and the right of their residents to earn a living. One thing is certain: free market state think tanks will continue to show the way.

 John Kartch is Vice President of Communications at Americans for Tax Reform. 

Authored by: James Pinedo

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