State’s rental law quashes little guys
Whenever innovation in the free market leads to a booming new business within the borders of Massachusetts you can bet that a mighty tractor beam from Beacon Hill will soon suck it in to the State House, rejigger its DNA and spit it out worse than it was before.
In the sights of lawmakers now is Airbnb, the short-term rental platform that has become a popular alternative for travelers to use in lieu of hotels. Simultaneously, it has allowed Americans to pocket some extra money by renting out rooms or entire properties on their website. Since its launch in 2008, it has facilitated more than 260 million home and room rentals worldwide. With its explosive success worldwide and certainly in Boston, Airbnb is now worth $30 billion.
It has been a blessing for residents in a state where the cost of living is oppressive. Massachusetts ranks 48th out of 50 states, according to the Council for Community & Economic Research’s 2017 cost of living survey. Everything here is expensive. Health care, day care, food, housing, etc.
Airbnb has given hard-working Bay Staters an opportunity to rent out their property and make a little extra money to try to improve their lives.
But as it is so often in Massachusetts, the hard-working and law-abiding are rewarded with higher taxes and burdensome regulations.
And so the House passed its rental regulation bill last Thursday. The bill would tax renters a minimum of 4 percent and a maximum of 8 percent per rental, depending on the total number of rentals available.
Cities and towns would be free to impose excise taxes of up to 5 percent for residential hosts. Those cities would need to adopt ordinances or bylaws requiring any residential units offered as short-term rentals first undergo a safety inspection, the costs of which would be charged to the host.
Furthermore, renters would be required to register with the Department of Revenue, which would be given the authority to charge a “reasonable fee” for registration.
We need to give people a break. Property owners who rent out their units on Airbnb already pay federal and state income taxes as well as property taxes. In comes the state demanding their piece, along with the city or town demanding theirs. Then the registration fee for the pleasure of having your personal address appear on a public registry. Add to that paying for your city to do a safety inspection at your own expense, regardless of whether you’re renting the unit two days a year or 365.
When asked on Boston Herald Radio about the onerous taxes and regulation on a typical family trying to make a few hundred dollars a month in order to pay for a child’s college tuition, state Rep. Aaron Michlewitz was very straightforward. “If they’re operating as a commercial business then they’re operating as a commercial business.”
And so the hammer will fall on the working class just as it would on Conrad Hilton.
Our elected officials will tell us that they just want to “level the playing field” so that Airbnb users are subject to the same trappings as those in the hotel industry. It is right that property owners and corporations with multiple units that have become pseudo hoteliers through Airbnb or another short-term rental platform should not be able to skirt regulations and taxation. That is thoroughly attended to in this bill, but the farreaching impact will cultivate a business environment where only the big dogs will survive.
Most people on Airbnb aren’t running unlicensed hotels, they’re just renting spare apartments or rooms occasionally to make a little extra cash. A tax on people doing it as large-scale commercial ventures is reasonable, but the extra fines and fees at the state and municipal level combined with having to register is asking a lot, and will intimidate regular people from renting on a small scale.
Only the investor-class businesses will want to deal with the heavy hand of the Massachusetts regulatory state, crowding out the little guy from the venture altogether.