The burgeoning gig economy gets a boost — from the new tax bill
- The new tax law addresses the growing gig economy for the first time with tax-saving filing measures for small business owners and freelancers, according to commentary on CNBC. One in five Americans — or 45 million people — are involved in the gig economy, which is expected to further expand in the coming years.
- According to the law firm Fisher Phillips LLP, the new tax law will lower taxes for small businesses, independent contractors and freelancers by allowing them to cut 20% off their taxable earnings.
- Lawmaking regarding the gig economy may continue. In 2017, Sen. John Thune (R-S.D.) introduced the New Gig Act to attempt to codify the gig economy into the new tax code. The bill would officially distinguish independent contractors from employees, while protecting gig workers' autonomy. It also simplifies tax withholding and requires gig businesses to report earnings above $1,000 to the IRS, encouraging compliance with the law.
Lawmakers' move to involve gig workers in the tax code received far less attention than the elimination of the healthcare mandate or the slashing of the corporate tax rate from 35% to 21%. But it's yet another sign that the growing contingent workforce can't be ignored by company leadership (or the government).
As the CNBC report notes, without incorporating the gig economy into the tax code, some gig workers would continue struggling with their tax responsibilities or entirely ignore the process. The tax code brings structure and authenticity to an economy that was once considered just a temporary employment fix for unemployed or between-jobs workers. It's an important step in codifying the contingent workforce into law, which could lead to better protections for the more vulnerable members of the working group.
What the changes don't do is settle the independent "contractor vs. employee" debate. The debate over worker classification, particularly over how certain gig employers approach it, will likely continue into 2018, as the U.S. Supreme Court has yet to decide to hear a case on the matter despite disparate cases nationwide.