Transcripts For CSPAN Washington This Week 20160528

This memorial day weekend, book tv features three days of nonfiction books and authors. Here are some programs to watch for. Tonight at 10 00, on afterwards, amy goodman interviews tamara thet sleeping gian,t how working class will transform america. On sunday at 10 00 115, an interview with the editorinchief of one world. He discusses his work with the likes of jayz and the author of the awardwinning book between the world and me. Sunday evening at 10 00, a Book Release Party for steve hilton and his book more human. A former Senior Adviser to David Cameron an cofounder of crowd we need to redesign our economic and political systems to meet the needs of americans today. Then on monday, memorial day, an extra day of book tv featuring on the intellectual life of thomas jefferson. A talk radio hosts on the importance of the 10 commitments and npr on the right to die movement. Go to book tv. Org for the complete weekend schedule. Now a look at th economice state of Silicon Valley with Technology Investors and Venture Capitalists. This was part of the annual Techcrunch Disrupt conference in new york. Its 25 minutes. So, im very excited to do because i mean, lets face it, valuations are down. The ipo market for tech Company Seems all but shut. There is a lot of nervousness out there and yet somehow vcs managed together more and Capital Commitments in the First Quarter than they have since 2006. So, if you are wondering what is going on, join the club. Were hoping these three savvy investors can help us out today. Guys, thank you for joining us. Chris, you are an investor in joshs fund. So, my biggest question right now is it seems like vcs are returning to their investors much faster than they have historically. I think maybe over the last decade it has been stated to raise a fund every three or four years. That might even be conservative. Now we are seeing xl, like the coming back in two years and lightspeed. Whats going on . As an lp on the money behind the money. So, people in my seat find people like josh and andy. I used to be at princetons endowment. So were kind of the sunlight of the venture world. All of the energy comes from us. Stop showing up. The trees with wither. Does that sound grandiose . The pool isnt infinite. Dollar going into Venture Capital compete at the institutions where these dollars come from against other asset classes. And so, one of the challenges that venture faces is that its further side of the money, longest dated option that most institutions buy. As a result there is a lot of pressure on venture. And one of the things that has been challenges is you over the last few years, the period has really shortens. It is a twoyear cycle. The challengee is that investing or vona for an nirv lp if you get to the point where you are recycling distribution. Hopefully each dollar comes back with three trends in short order. Dollars andnd out they would come back and find your commitments. As fundraising cycles have shortened, liquidity cycles have gotten longer. There is this huge exits thinker. Sphincter. He did just say what you thought he said. We are pushing this capital out and feeding the snake. Lps give gps money. Gps give status money. Snakeou got the the getting backed fuller. We are in brooklyn. For those of you who are familiar with the group wung tang klan. Im going to sew your rectum shut. The dynamic you describe is an unsettling longterm dynamic for longterm ecostatement ecosystem health. Happening . T it did seem like startups were raising funding every six months or so, but critics including bill gross said these guys are racing back to investors before their paper gains disappear. It is an important point because right now a lot of venture funds are looking amazing on paper. Right . In fact, one thing that is a pet peeve of mine is we get emails every day that says our fund summit is that we just had a bunch of marcus. Markups. Cash on cash. No, its paper on cash. In Business School we always talked about that you get you when a trade turns into an investment. Are headedi fear we for this moment where the , there is this moment where the unrealized becomes the unrealizable. And that will be the moment of nausea. Bill is absolutely right. Nobody wants to be the last fund in the market when the music stops. It is going to be a game of musical chairs. From the lp perspective, everybody is tapped out. People blow through their budgets because Companies Come back so fast. And were all so, just exhausted. There is this kind of psychic exhaustion among lps. Everybody has been running too hard. Reacting rather than being proactive. Andy you are from union square ventures. Just closed a 166 million fund. We dont talk about our five. You filed a form with the sec. You are sticking to your traditional trajectories. Josh, what about you . You raise your last fund in 2014. Are you in the market this year . We target raising every two and a half years. So that would put on pace to raise at the end of this year. Ok, great. I guess, chris, do you feel like, you can say no. You would never say no to josh. When i spoke to bill he made this point it is very hard for lps, because you say no, you can lose your seed at the table for the duration of your career if you lose your seat. That is absolutely true. We were just talking about this backstage. Yale Investments Office which is the exemplar of, they basically invented the game from the Institutional Investment perspective. One of their secrets of success has been getting off the bus on e stop too early. But that takes courage. Most investors lack courage because they focus too much on career risk. What you say no, you are forever in bad graces. We all have examples of, i wrote a blog post called the vista melody of investing. The pistol balaji epis tomology of investing can i said no the xl facebook find twice. Everything in that moment said that was an easy no. Boom they put up one of the greatest funds ever. I have been persona non grata there. Lets just say i am not on their speed dial. Andy, usv has famously wonderful returns. Speaking more broadly, this is a very funky market. How do vcs turn their paper gains into cash on cash returns . Its not really up to us. We dont have control. The companies have control. My partner has been outspoken that company should be going public as a way to get liquidity. That is one way to do it. That is one of the issues. Ipos has of decreased so we do not get liquid. Im having trouble hearin gyou. Josh, what do you think . I tend to agree with you that we are seeing a lack of ipos. Part of that is caused by the fact that there is a massive dislocation between how private markets are valuing companies and how Public Markets are valuing companies. Moment in time private companies would aspire to go public so that they could achieve the Public Market valuation. Were in the rare moment in time where it is the opposite. It is if the Minor League Ballplayers are getting paid far more than the professional allstar mvp major league ballplayer. Until that works itself out in the market, it is going to create a really challenging time for these companies that are being valued in the private markets to realize anything near that price in the Public Market. Markets are efficient, that equilibrium should occur. It looks like we might be seeing some of that correction now in the market. Its interesting because there is a real echo chamber dynamic. One thing that strikes me as an lp, when you get these disconnects, it is very difficult to kind of glide back to kind of this rational ordering. As a result, you get these funky, riskadjusted return inflections where you have got private companies more value than Public Companies. If i could wave a magic wand, i would invent a way to short private companies because that would recreate the equilibrium. The stale prices associated with private companies makes it Public Companies trade every day. Good news. They trade. Bad news, they trade. Private companies typically trade one of two reasons. When there is good news and the company was to fund raise. Or when the Company Needs cash so badly that they are willing to trade on bad news and capitulate on price. What that means is that youre going to need to see Companies End up having to, some of these companies will have to work through their cash before these private companies trade to sort of where the market should be. I think we are at this interesting point where we dont know where the industry is trying to fit what the industry is trying to figure out, are we using the right comps. Are Lending Companies innovative marketplace and should be valued as such, or should they be valued as letters . Should Ecommerce Companies be technologyreal innovators, or are they a Mattress Company . They get valued differently based on that. Even companies that are clearly creating markets like uber nobody knows what to price it at. Ventures talk to business insiders this weekend. Tradedght uber if publicly would go at 25 billion which is far less than its private company value. Do you think there is a watershed moment . Sometime when i talk to experts they are like, the Stock Exchange operator went public and they thought maybe that would be. I believe we may be seeing the first Tech Companies go public this year, this week. I dont know, i think it is a networking company. Are you sort of thinking is there a Certain Company that everybody is waiting on to open up this market . Not necessarily . [laughs] stage investor. For me, i find that the earliest end of the cycle. Ill leave the prognosis getting the prognosticating to the tor. Ic market investig google, companies, microsoft, apple and facebook have a enormous sheets but they seem like very reluctant buyers. Your companies talking to these companies . Yeah. Were, there is a high level of activity. I do not know if there is a high level of desire to pay prices that maybe divorced a little bit from fundamentals. And maybe there was more of that in the past. Seems like there is less of that right now. I guess it is probably also catching a falling knife. Why not wait another six months . There are some companies where they buy them for a far in termstegic reason of access to technology, access to talent. Filling a strategic call or access to customers. Tsappan look at the wha acquisition by facebook in that regard. If it is financially driven, it is going to be subject to the same Market Forces that the ipo are subject to. What are you seeing in terms of valuations . On the west coast it seems like valuations are down a bit. Interviewed last week, was saying the one exception is celebrity investors, meaning serial entrepreneurs created companies and the space where they have expertise. Is that true on the east coast as well . We have seen it on both coasts. Valuations of taken a slight dip. Remember in the last four years, the average valuation has almost tripled. So, even if it is down 10 or 20 , its still a very attractive time to be an entrepreneur. What you think, andy . We dont really track valuations that much. Every deal there is a moment in time where theres a company that desires to have an investor and has a certain price desires to invest at a certain price. I dont see any generalizations that it is higher or than before. That is is higher or lower than before. There is uncertainty, so entrepreneurs may be more flexible than in the past. I do not track valuations. The vcs you dont think are more price sensitive . As a firm that does not invest that often. Eight to 10 times a year. It does not extend out to generalization. You see amany companies. Sure. For us, we need to invest what we think is the right amount of money and get an ownership position that allows us to deliver people like chris their returns. You said entrepreneurs are being more flexible. Can you get more for your dollar . Maybe a couple years ago they say, we will give you 15 . Now they are, take 20 . We dont attempt to get more for our dollar. It is not like a commodity. The right amount relative to the risk relative to ask the expectations to deliver our lps some money. We do not want to be that much because that means it comes out of the other side. It is interesting because i talked to a lot of they see honest broker in a sense. And not one of these sharks from shark tank. Im kidding. But its interesting because in palo alto valuations expectations have been kind of cranking ever affords. Upwards. I think we are seeing the first chill where we started to see some tech company layoffs. From my feed, i invest in a couple of dozen funds. I am a big Second Derivative guy. Im not terribly smart. I remember it is the rate of change. While the market is still going up. The rate is slowing. That is what we saw in q4 and q 1. As we see the market plateau in terms of expectations im seeing some investors. The market is not clearing for some companies. For the transactions to get done. Hopefully we will see a reset of Investor Expectations and entrepreneur expectations to get us back to an interesting kind opportunity. Ential as the market has gotten choppy over the last couple quarters, it is also important to realize that you have a whole generation of founders, and to some degrees funders, investors who have never been through a downturn. If youve been in the industry for the last seven years, you have seen straight up. So, its also just important i dont think its ever as bad as people think it is. It probably was not as good for the last seven years in terms of where the markets are. Most and venture firms have inflated marks. Josh, you identified seven years. I will even say that i think08 was a gag. Most companies, and i should not say that necessarily but most gobies have cash for 1218 months at any given time. That was a very short dying to. Downtrun. Urn. I meet with a lot of folks that are raising funds and say in 08 this is what i did. I remember 01 and 02. I was at princeton. I relearned what you saw this grinding. Every quarter we are down 20 . 8 quarters ofd, markdowns. That was a grinding downturn that is where you had financing risk. You had all kinds of syndicate risks. Nobody has seen for 15 years. You dont think we are heading into that . I dont. I think people will say, puff their chest and say i have lived through a downturn have no clue. We are two generations removed. At some ellevel it is differt this time. Yes. Part of the challenge is to figure out how it is different or in what way. I agree it is a challenge when you have been an environment of 10 years of thriving asset prices. That is the cadence you know rising prices. When they are not rising, you need to learn new rhythms. At the same time, in that 10 period we got computers in our pockets. Figure out what ways it is different and find the right clearing prices. At the same time, it does not feel like the world is falling apart. It does not feel like the world is falling apart but the question is how different is it . It seems to me like it is different but you hear investors say there is a fundamental misunderstanding even though the opportunity is global. Even though everyone has a smartphone and their pocket. There is going to be a small number of breakout winners. Do you guys agree, disagree . Has the opportunity is the size of the Winners Circle changing . Are the winners getting bigger . Yes and yes, right . At some level, the leaving companies today the leading companies that did not exist 10 years ago are incredibly powerful position. They have an incredible advantage. At the same time, the opportunities seem broader, too. And thats a tough balance i found in my First Company in 1992. Right when the year before the web browser was invented and saw the internet rise. I remember everyone talking about how the internet is going to disrupt every portion of daily life. It really has. Yes, while you now can go global and yes, you are mobile. I dont believe that we are done creating amazing companies. But i also do not believe that this time is fundamentally different and this time is 3x larger than the last time. And the market is going to need to figure out how to price that. Everyone was talking about a speculative bubble when amazon went public. They went public at a value of 500 million. You now have the amazon 2. 0 raising in the private markets at a 1. 5 billion price. So, you know, the opportunities are still there. But im not a believer that you are going to see a massive increase in the number of Epic Companies that are created. From my seat, one thing im cognizant of is the return is a function of the price you pay. As weve seen pricing go up and up in terms of startups, jet is an example. Literally you can point at any start up. Theyre raising one thing that strikes me, if i look at my portfolio and josh is in my portfolio first round, first round has a Budget Companies that would be in the s p midcap 400, which is amazing. I see entrepreneurs raise money in the private markets. You have to think about how my going to put the mooah in the coolah. You have got from the valuations to the exit, we open up that the capitaler and comes back to me, are we getting the kind of returns we expect or are the returns becoming more pedestrian . I believe thiss, time it is different, that you will see larger outcomes. That is great, but all of the losses portend bigger holes. That is what i worry about. The paradox is that i think maybe i disagree with josh. I think the opportunity is much greater than 3x. Couuld be could be 10 or 20 or 100x. Is a reality. The question is where do investment returns come from that . And thats uncertain. If the investment returns dont we need toeed what return to you, what are the implications of that to the next generation of funds or entrepreneurs . I dont have an answer. To me, the question is last, are there great opportunities . I think there are. But fundamentally bigger. In the meantime, are you guys since the ipo market is kind of shot and it is slow are you seeing your follow on investors are changing . I keep here about hearing abo ut opportunities to do deals. A couple of funds recently. Raisedentures opportunity funds to capital is perceived or real gas. Is it real . So, it is hard to take one quarter or two quarters and try to extrapolate. You know, were still seeing Good Companies can get funded by good investors. The, there are as markets have grown we have seen, as the valuations have gone up, as more companies have sort of achieved unicorn status we have seen more investors, non traditional investors, come into the space. But i have not yet seen a surrender of the existing traditional venture investors. Toyeah, i want to go back something i said. The ipo market is never either neither open or shut. It is what it is. It is the companys choice to go public. They may not like the prospects. But this is always open. Arechallenge some of us facing is the disconnect between private evaluations and what Companies Think they can get in the ipo market. The ipo market is always open. Any last thoughts . Put the moolah in the coolah. Thank you so much for being here. [applause] [captioning performed by the national captioning institute, which is responsible for its caption content and accuracy. Visit ncicap. Org] madam secretary, we probably give 72 of our delegate votes to the next president of the United States the Libertarian Party is holding its National Convention this weekend in orlando, florida. Live coverage of the event tonight at 8 00 p. M. Eastern when the president ial candidates face one another in a debate. You can see that here on cspan as part of our road to the white house coverage. Nicholas sarwark is the chair of the Libertarian Party, joining us from orlando where the Convention Gets Underway this weekend. Thank you for being with us. Mr. Sarwark thank you for having me on. Host walk us through the schedule saturday and sunday, what viewers and listeners can expect, and how many candidates will be vying for the nomination . Mr. Sarwark on saturday we will actually have the nomination of the candidates. Names will be placed into nomination. There are currently 18 candidates seeking the nomination. In order to be eligible, a candidate needs to get signature tokens from 30 of the 1000 delegates present. Debater to be in a saturday night, candidate will need to get 10 or more of the signature tokens from the delegates at the convention. Host what is happening behind the scenes, how does a candidate campaign for the libertarian nomination . Mr. Sarwark it is all very retail. The preliminary the Libertarian Party has delicate scent to a convention. No delegates are bound in our party. All 1000 delegates will be free to vote for whoever they like. So, candidate sending out mail orders, emails, personal phone calls to the delegates, an walking totes, thed convention hall, even as we are the day before we start ive seen candidates pressing the flesh with all the delegates to earn their vote. Former republican governors, gary johnson of new mexico, bill weld of massachusetts, forming the ticket of johnson and weld. They are getting a lot of attention but as you indicated they are not the only candidates vying for the nomination. Mr. Sarwark they are not. This has been a very vigorous race for the nomination. There are between three and depending on how you count, candidates who have been going around from state Party Convention to state Party Convention over the last few months trying to earn the support of delegates. You have governor johnson, you have john mcafee. Youber Security Experts are have austin peterson, a tv producer. Dr. Mark feldman. An activistperry, from new hampshire. Host what does the Libertarian Party stand for . What is your basic Mission Statement as a party . Mr. Sarwark our basic our core principle is the idea that every person has a right to live their life and pursue happiness in any way they choose as long as they dont hurt other people or take their stuff. It should not be the governance business how you raise your family, how you run your business, how you choose to relax on weekends. Those are decisions for you. I dont know how to live my life as i ought to and i sure dont know how to live someone elses life. We believe politicians have no Greater Knowledge of how your life ought to be lives. The as a member of Libertarian Party, why did you join and why are you leading this Political Party . Mr. Sarwark i joined. I was introduced to the party when i was 12 years old. My father took me to a local meeting. I have never been anything other than libertarian. It seemed right to me. The idea that theres humility to it. I do not know best how to live someone elses life. I saw the National Chair in 2014 thatlumbus because i felt we were out a point where we had been doing this groundwork for almost 35 years now, and we needed to break out. We needed to make sure that we become a force in american politics and are in a position thectually chip shape debate and move our agenda forward. Host do you think your nominee has a chance and the general election . How do you breakthrough between the democratic nominee, if it is Hillary Clinton and the republican nominee, who will now be donald trump . 2016,rwark the goal in is that i have to go to an inauguration party. If you look at the american electorate, the largest chunk of the electorate are people who dont vote because they are disgusted with the system. The next largest chunk are people who choose not to affiliate with either of the two parties. Only then do you get into registered republicans and democrats. With the nominees being the most hated people in modern politics, n historic election for us. We have an opportunity to breakthrough, to get on the debate stage, to really present something for people to vote for, rather than arguing over who is the bigger bully or who theyre more afraid of. Host do you think you will be taking away more republican votes, more donald trump votes, versus democratic votes . Where is your appeal . Mr. Sarwark i think our appeal is across the spectrum. Historically our demographics, our members have come 1 3 forom former republicans and 1 3 from democrats and 1 3 fomro politically independent. In the two old parties, there is a block of voters who feel like they have been cheated. Republicansnstream feel like they were cheated out of the nomination. That ended up being given to a reality show star. The more progressive democrats feel like they are about to be cheated out of the nomination with the weight dish Hillary Clinton boxing out bernie sanders. There are a lot of unsatisfied people from the right and the left. Left. Will continue to not move on that left right spectrum. Do you want more individual freedom or more government control . We are for more freedom. Cspan will be providing coverage through the nomination process. What do you think people will learn as this process unfolds . That there is another way to do politics in this country. If you want to control peoples lives, there are two parties for you already in this country. If you want to live your own life the way that you see fit, to raise your family the way you see fit, we are the only party that stands for all of your freedoms all the time. I think people will be excited by it. Joins usholas sarwark from orlando where the Libertarian Convention will begin. Thank you for being with us. Guest thank you. Travelingpan bus is the country to visit winners from the student cam contest. Foxboro, it stopped in orough to honor eighthgraders for their video gunning for safety. Videoelliott one for his video lgbtis writes. To 50 for winning the videos. Comcast and our Charter Communications cable partners. You can watch all of the winning entries at studentcam. Org. Challenges fort businesses with shared services. Lawmakers consider changes to tax code and other factors that could benefit employees. This is just over an hour. The committee will come to order. Thank you for being here. We want to thank our witnesses for taking time from their busy schedules. We are here to examine an exciting new phenomena in in our society, the sharing economy. Act,goes by many names gig, peertopeer, online, collaborative. We have even heard it called the uber economy. No matter what you call it, the sharing economy has changed the face of american entrepreneurship before our very eyes. Who participate in it. This new generation of workers want to set their own hours and decide which jobs to take. They may work with one ondemand platforms. Multiple they may work alone or pool resources with others. Is the essence of economic liberty and a testament to the power of the free market. Runningtrepreneurs are smack dab into the buzz saw of a tax code that is not designed to comply with them. The challenges of the tax code acknowledged u far. Owledged so some of these entrepreneurs fail taxes altogether, and when they do, they pay too much. Thatdo not have records to of deductions, putting them at risk for and not it. The irs has not been a solution for entrepreneurs in navigating the sharing economy. Too often it has been part of the problem. Our current tax system is not working for these Small Businesses. We can do better. We must do better. Discuss solutions with this distinguished panel. We are very much looking forward to hearing from the panel today. Theuld like to hear from gentlelady from new york, ms. Velazquez for her opening statement. The sharingz venuey has created a new for entrepreneurs and for markets to allow the selling, renting, and trading of everything from apartments to goods. The number strongly suggest the new sharing economy is here to stay. More than one. 5 million Internet Users 1. 5 million Internet Users have used taskrabbit to apply for jobs. 50 uber app is available in countries worldwide. One reason for the sector for rapid growth may be rooted in economic struggles. Sluggish,growth arerprising americans seeking new ways to replace revenue. Others seek more flexibility and work life balance, renting out fts inand providing li their car, providing ways for ordinary americans to experiment with entrepreneurship. What the explosive growth of these networks has created rapid rise, the raises questions. While many workers in the shared economy in joy flexibility, they must be rejected from business practices. Most of the businesses operating in the shared economy classify workers as independent contractors, not employees. Such classification saves businesses money through reduced benefits and tax withholdings. Businesses and courts have launched have long struggled to determine whether certain workers are employees or contractors. The courts are overflowing with companiesver whether have misclassified employees and they are prevalent in the sharing economy. As always, the challenge is arering that businesses encouraged without quashing innovation. Control is the factor for this employer if the controls the worker, how can the worker be truly independent . This question has become a harder to answer. Our current approach to seems to beis expanding. Costs themated it billion ines 15 unemployment taxes. It is important that as this technological revolution advances, government policy keeps pace. That we haveortant a grasp on how we can minimize risk for employees, while maximizing growth and productivity for Small Businesses. Todays hearing will give us that opportunity. I would like to thank all of our. Itnesses for taking the time your perspectives will add value as committee shares the committee evaluates the sharing economy. Thank you, mr. Chairman. Rep. Chabot i will take a minute to extend our timing system. You get five minutes. There is a lighting system to assist you. The green light will be on for four minutes. Then the yellow light will come on to help you wrap up. Then the red light, you do not have to stop midsentence, but if you can wrap it up there, we will appreciate it. I will introduce all of the witnesses. Our first witness is Caroline Bruckner from the tax policy inter at American University washington, d c. In that capacity, she directs researchers. She served as the chief counsel for the u. S. Committee on Small Business and osborne or ship. Robsecond witness will be taskrabbit. Operatesny currently in 18 cities. He campaigns for global clients including nike, cadillac, and no are we welcome you here this morning. Morgan reed, the executive director at a ct, where he focuses on development issues. In addition to testifying last her, mr. Reid has also testified before the u. S. Senate and written several white papers on active element. Counsel for the mobile Health Management management system. And i would like to yield to ms. Velasquez to introduce our fourth and final witness. Thank you. Ez our last witness is joe kennedy, senior fellow in the Information Technology and innovation foundation. Mr. Kennedy previously served as the chief economist for the joint economic committee. He has a phd in economics from George Washington university. Welcome to the committee. Thank you. Rep. Chabot thank you very much. Ms. Bruckner, you are recognized for five minutes. Ms. Bruckner thank you for me to join you. My name is Caroline Bruckner. Kosgode director of the school, focused on the implications for Small Business owners who are providing services and selling goods in business transactions coordinated online and through companies such as airbnb, at sea, uber, lift, task rabbit, instagram, and others. We released a paper entitled to shed light on these issues. Having spent more than a year focusing on these growing problems, for tax purposes on demand Service Providers and product sellers are Small Business owners and there are millions of them working and earning income in ways that are not readily identifiable by existing Government Research or available taxpayer filing data. We argue that this should the considered by the ire rest, not only because millions of taxpayers are needlessly verdant burdened, but also because there are very real implications on the treasury and irss ability to fairly and efficiently collected taxes. A number of findings we included not research are typically relevant to todays discussion. Earningion americans income in the ondemand platform economy every month. This reflects the explosive growth of the ondemand platform economy, but is the latest example of a 66. 5 increase in alternative arrangements for u. S. Workers in 2005 through 2015. The people cycle in and out of the ondemand economy, the average monthly income ranges from 533 to 314 per month. By and large the number of individuals in the ondemand economy work more than 15 hours per week. We spoke with dozens of individuals and initiated a survey of the members of the National Association of these selfemployed. We wanted to determine if there were tax challenges for those who were selfemployed, Small Business owners. The responses indicated informationlack of regarding tax phone applications. Among respondents who had earned income with an ondemand Platform Company in 2015, 22 percent of respondents, approximately one third did not know whether or not they were required to file quarterly pay estimates with the irs. 43 were unaware how much they would open taxes and did not set aside money for taxes on the income, and on the tax did not know deductions, expenses, or credits that could be claimed. As a result, a significant portion of these taxpayers could face audits for failing to comply with filing rules that are triggered by relatively low amounts of income. They can also be quantified by chasing down task questions from the irs. But we heard time and again, from taxpayers, ondemand labrum companies, and taxpayers that Small Businesses generally want to be honest and pay what they all, but the tools and resources do not exist. Indeed more than 60 of our respondents reported that they or not receive a form 1099k 1099 miscellaneous from their ondemand platform, which likely means that the irs did not either. This is not surprising given the current Tax Administration system is not working for a significant portion of Small Business operators, treasury, or irs. At the root of this problem is of information, which is compounded by a reporting regime that results in widespread confusion. These challenges will only grow to affect more Small Business owners. It is a general confusion state of play when it comes to filing, which was reinforced by Industry Experts and our survey. Everyone is losing under the current rules. The ondemand economy players and the irs deserve greater efficiency and less hassle. We can do better. I thank you for the opportunity for todays discussion and the work you do on behalf of Small Businesses. Rep. Chabot think you very much. Willey, you are recognized for five minutes. Thank you. In the Vice President of taskrabbit. I am the Vice President of taskrabbit. We set out to revolutionize everyday work. Have probably figured out we needed someone to help us with yardwork, fix a shelf, paint a room, mow our lawns. We recognize and realize that opportunity with new york being our largest market and london being our fastestgrowing market. We have 5000 taskers active at any one time. With that said, we are looking to change the face of the andstry with our taskers their everyday needs. We support them with flexible prices for flexible hours and flexible locations on an average of 35 an hour. This is what we call everyday work for everyday people. With that said, only 10 of our skers work full time this flexible nature of our work is consistent with the larger platform economy. February 2016 study by jpmorgan found an overwhelming majority of americans who earned income through platforms like ours did so to better support themselves and their families. Economyemand platform has become an important option. Ondemand platforms like ours provide a new earning option millionsccessible to of americans. The emergence of the platform economy has sparked intense debate. The current classification has been shaped by decades of court cases. Result, there is uncertainty about what we can do to support our tasks. As professor Caroline Bruckner noted, many participants who do not know or are not fully aware of both the Tax Obligations and the benefits, as a result of earning income. We at taskrabbit know that others are facing these challenges. They sign up to join our platform, making their first foray into the world of selfemployment. Some of them do not understand the economic triggers that require the filing, but many do not. It is our interest to see our taskers see a better understanding of compliance and planning. Greater flexibility and transparency would help maximize return on participation in our network. It is their freedom as entrepreneurs. Todays topic is just one of many where taskers could benefit from better training. Theyre looking to better market themselves and services, Access Health care, and plan for retirement. We would like to be a resource, a partner, and collaborator for them. We urge congress and relevant Government Agencies to look at participating in this emerging Platform Market place. As a pioneer of this emerging market, we welcome the opportunity to work with policymakers as our Company Grows and matures. We consider this engagement rewarding on many levels. Just last month, for example, we became the First Technology company to announce that we would follow the diversity principles outlined in the Congressional Black Caucus and the tech 2020 initiative. Mr. Chairman and Ranking Member velasquez, we thank you for your interest and taking the time to understand our business, and how it is changing what we call the future of work. We appreciate the bipartisan interest in the platform economy, most noticeably by the committee, cochaired by congressman darrell issa and eric swalwell. We hope we can find solutions that will further enable us to innovate and grow and to empower all Business Owners across the country. Thank you. Rep. Chabot mr. Reed, you are recognized for five minutes. Mr. Reed Ranking Member velasquez and distinguished members, my name is morgan reed. Thank you for holding this important hearing. The App Association represents 5000 staff makers and connected 5000 Small Business app makers and connected Device Companies across the United States. Our members have enabled the rise of the sharing economy leveraging the connectivity of smart devices. Sharing Economy Companies have grown rapidly over the past decade because they allow instantaneous communication secure transactions, and personalize relevance to consumers. Moreover, these same factors allow Small Businesses and tens of millions of americans to earn more for their families with a flexibility and autonomy, all powered by the smartphone in your pocket. These opportunities will cease to exist if that federal regulations continue to hinder growth. I want to highlight three tax policy actions that affect our members. First, congress and the Internal Revenue service should take great care to ensure that the federal tax code enables, rather than stifles, the sharing economy. Specifically, treating them as employees are the federal tax codes would be detrimental. Especially to Small Businesses. We need transparency in the tax resolution process, including the ability to settle disputes with the irs in an effective and efficient method. Legislation like that imposed by senator rob portman can ensure that. Congress should ensure fairness that Internet Sales tax are based on the location, calling congress to reject proposals that would force businesses to become but beyond the specific policy request and legislative language, i would like to take a moment to illustrate how the sharing economy is far more than existing packages. The popular media tends to describe the sharing economy as a disruptor of existing Business Models, ebay replacing the yard sale, uber replacing the taxi. But this is a false or at least limited dichotomy. The sharing economy not only replaces also creates new concepts in people engage and interact. Or example, a business in chicago utilizes a sharing platform to connect nutrition coaches from across the country to consumers seeking a healthier lifestyle. Using the service, dedicated services help consumers meet the goal. But they do not merely connect you to a nutrition expert. If ultimately switches the paradigm by getting users to change bad habits, not just the once a month meeting you would receive with traditional care. Users can take pictures of food they are eating, share it with their coach, and get realtime feedback and enforcement. Coaches get inside about their existing habits of the user, so they can step in before that decision is made. Actively working to prevent diabetes and other health problems. In short, creating Healthy Habits is relationshipdependent. It does not exist without the tools that create our modern sharing economy. You would merely have individual coaches trying to change bad habits given an isolated 60minute session. There is no possible way that every coach and registered dietitian would provide their own tools. Nor could a company writing the software afford to hire an army of nutrition coaches, and and hope to create a user base. The only way it works is through the sharing platform, one that allows users to find health they need, and for the coaches to build a take as many or as few clients as they want. So, as you see, everyplace is no existing industry. And there is a story like this in every single district in america. Each one of you received a packet of baseball cards with companies from your district. Not all of the businesses are all part of the revolution taking place. One that is moving high, beyond just big companies, in fact, our most recent study showed that 82 of the Top App Companies are Small Businesses. Most which hail from other than Silicon Valley. The company that you have in hand are looking to grow and succeed, each with their own vision of what success looks like. But the success of the sharing economy is predicated on the success of a powered universe, opening up a bricks and mortar location and providing services online, and for platforms to track users through better training, tools, and clients, without triggering a change in tax status. We urge congress to ensure the rules we follow make sense in an age where the neighborhood yard sale is now nationwide, and the daily client may not live in the same country. The system empowers the sharing economy, and offers incredible and benefits to each and every american. And i look forward to working with you to advance measures that empower innovation. Rep. Chabot thank you very much. Mr. Kennedy, you are recognized for five minutes. Mr. Kennedy thank you for the opportunity to discuss this with you. Icfs approach to this topic is driven by three considerations. The first is that, while the sharing economy is growing rapidly, it is still representing only a small fraction of an increasingly diverse labor market. Second, internet forums are delivering tremendous value to both consumers and workers. In a survey of over 4600 workers from 11 Platform Companies, only 7 said they were dissatisfied with the experience. Workers earned an average of 7,900 over the previous 12 months, which accounted for 22 of the total household income. The average Hourly Earnings was 28. The third consideration is that the traditional employee and independent contractor distinction no longer serves much purpose for a growing share of todays labor market. Actually by default, the commonlaw test has become the basis for determining whether all of the major federal and state labor laws apply. The results is a large amount of uncertainty and litigation that discourages companies from supporting gig economy workers and consumers in a variety of ways. Some of the ways that companies have said they would like to support the independent contractors include training and access to business and financial advice. Such efforts can be enormously valuable to workers, who are, after all, for all intents and purposes, running their own businesses. Within the tax field, help with tax advice, recordkeeping, and withholding would be especially important. The tax laws are enormously complex. Workers need to make a number of important decisions, including what form of the business to create, whether to set up a new savings plan, and what salaries to pay themselves. They need to determine what expenses are deductible and begin keeping the necessary records. And they need to complete the tax filings in a timely manner. In a survey, 20 of online workers listed understanding tax and legal obligations as one of their top challenges. In addition, these Platform Companies could add value to both workers and consumers by setting prices, handling transactions, letting parties rate each other, and conducting background checks. Such activity is also used as evidence of an employee and employer relationship. Public policy should encourage companies to support their workers carrer, irrespective of the relationship. If a company is beholden to all workers, but pay for access to tax business advice, or extends benefits to independent contractors, why would we want to discourage that by insisting that it must also a subject to minimum wage collectivebargaining and unemployment legislation . In a recent ipif report, i argue itif report, i argue there are three approaches that congress can take to begin modernizing the nations labor laws. The best option would be for congress to amend each federal labor law, by replacing the commonlaw with a specific piece of legislation. The second approach would be to define a third category of workers, somewhere between an employee and an independent contractor. Finally, congress could give platforms devoted to personal services a temporary exemption from most labor laws. The workers of many of these platforms are clearly independent contractors anyway, under the commonlaw test. The small size of the gig economy and the temporary nature of exemption reduce any risk to the broader labor markets. The world around us is rapidly changing. Work arrangements will continue to diversify, as companies respond. Congress cannot dictate the shape of future work arrangements. It can however play a large role in helping workers in the kind of support they need to have good careers that fit into their increasingly complicated lives. Thank you again for the opportunity to appear before you. Rep. Chabot thank you very much. We appreciate the testimony from the panel this morning. We will now ask questions. I recognize myself for five minutes. Ms. Bruckner, we will start with you. You testify that more than 60 of your survey respondents did not receive a form 1099k or a form 1099 miscellaneous. What changes would you suggest to benefit both workers and the irs . I think that the first thing we should do is recognize that the instructions for the form 1099 miscellaneous direct people to use the form 1099k for credit card reporting or payments made by credit cards, and that creates a tax reporting loophole for income that is earned by less than 20,000 because there is a certain income threshold for using the form 1099k. And i think the irs should medially consider the instructions on the 1099 miscellaneous and see if it can be used for credit card payments the income threshold of 20,000. Rep. Chabot do you have a sense of how many folks are not complying with the tax code, because it is im talking about the sharing economy. It is to come to get it into cumbersome versus well, you know im not going to pay my taxes . Ms. Bruckner that is a good question. I dont have a hard number on that. But i can tell you anecdotally, when we talk to folks that are in the sharing economy or me talk to tax preparers that whoialize in advising folks earn income with platform related work, they were fundamentally confused as to whether they had a taxes on the income earned because in many instances, they denied any 1099 at all. Rep. Chabot thank you. Mr. Willey, i will move to you now. We heard a lot today about the tremendous projected growth of the sharing economy in the coming years. What are the taskrabbits estimates, and what you see as having the best Growth Potential . if history is any indication of the future, which we believe it is, year over year to date we are growing at 4x on a revenue basis. We are also growing tasks. We have 15,000 organic applications on a monthtomonth basis. Both of those indicate that one, we are still in the very early days. And what the sharing economy can do, two, we are a figurehead of growth. Rep. Chabot thank you. Mr. Reed, i will move to you. We discussed the complexity of all of this, how hard it is to get information, how to figure out to comply with the irs code under existing code, very confusing. Is it possible that there is some enterprising entrepreneur out there that could come up with an app . Form their own company, this kind of problemsolving problem, rather than the government . D number one, yes. In fact, there have been some early to Market Applications that attempted to make the switch. One of the real discoveries that we found is that an application that is on your device to help you with taxes is one you likely only turn to at that moment of panic. What were really seeing now is that the fact you have to do an integrated application, but you need to be able to pull in the information from taskrabbit into your Tax Preparation Software on an ongoing basis, so you can keep track of it. That leads to one of the confusing elements we have been discussing. If any of these companies were to provide that kind of interactivity, and that ongoing information flow and the training, well, that might trigger the case of them being considered employees. So on the one hand, while it is difficult to put an application that draws the right information, and in the platforms are concerned about the liability they may take on by providing us the very thing we need to satisfy the first question you asked, how do we get people to pay their taxes . Rep. Chabot thank you. Time for one more question. Mr. Kennedy, even if we were able to government a temporary legislative moratorium on the sharing economy, as you suggested, you correctly point out that there are myriad relevant state and local laws on the sector. How would you address inconsistencies between federal action versus state and local . Mr. Kennedy yes, i say two to things to that. The first thing i would say is there is room for increased dialogue between the states and the federal government about what the common rule should be. We would like, i think ideally, for there to be consistency at the federal and state level. Encouraging reform at the state level, managing reform at the federal level would be important. And the second is that congress can, to some extent, preempt state law using the commerce clause. There is room for debate about where that line is. But i think there is hope for preempting a lot of the state legislation now. Thank you very much. My time has expired. Ranking member is recognized for five minutes. Ms. Velazquez thank you very much, mr. Chairman. Mr. Kennedy, in your testimony, you touch on this issue. But i like to hear more i would like to hear more discussion on it. There is a level of complexity inherent in operating a business that straddles the boundary between wage employment and selfemployment. What can be done specifically in tax law to overcome this challenge . Is it creating a new hybrid definition of an employee, or amending the irs safe harbor rule . Mr. Kennedy i mean, sorry, my inclination would be to amend the safe harbor rule, to create a brighter line between the employee, where a particular law applies, and where it does not apply, so that people know what side theyre on. I think you can also, for people who only make a little bit of money on these platforms, you can raise the threshold so that they do not need they still need to report income and pay taxes on it, but they dont need to make quarterly payments. So, i think there are two, hopefully minor, reforms that would make a difference. Ms. Velazquez thank you. Ms. Bruckner, there has been some concern from traditional brick and mortar businesses about the emergence of the sharing economy Business Model, and how it affects fairness. While i do not advocate one Business Model over the other, how do we ensure that actions taken to foster entrepreneurship through new methods do not disadvantage businesses that invest time and money to conform to existing regulations, when classifying their orders . Their workers . Ms. Bruckner i think the first thing you can do is promote understanding of what your tax filing obligations are. Because people view unfairness when they think that other people are not paying their fair share. If we take action on outreach and education, on what income you need to pay taxes on and really promote what your tax filing obligations are, then we are creating an opportunity for people to actually pay their fair share and creating transparency, and making sure that folks, be they in the sharing economy or working for a brick and mortar business, are both paying their fair share. Mr. Reed, any comments on that . Mr. Reed i think what the studies have shown from ms. Bruckner and mr. Kennedy is that that paradigm of brick and mortar store, as an entity, is almost nonexistent. Sure, there is a corner bodega that sells ice cream and sundries that will be isolated. But in nearly of every other business you will have a mixed economy. I started a bike store when i was younger. I still own part of a bike store. Well, we sell part of our equipment online. We get rid of stuff online. We use Services Like ebay, etc. Even your corner independent bike store is probably going to have interaction in the sharing economy. And so, while it is important to preserve the rights and capabilities of the brickandmortar store, we have to understand we are merging into an always connected, always in line, and candidly always selling economy. Your views on that, mr. Kennedy . Mr. Kennedy i mean, yeah, i think somebody who is paid 1 million for the medallion in new york probably feels a bit aggrieved. But i think if you look at it objectively, uber is a better model. They are reducing prices, serving neighborhoods that traditionally have not been served so well. And the riders seem to think it is a better experience. So the answer, i think, is not to go backwards to the traditional model, but to free up the traditional taxicabs and brickandmortar businesses so that they can participate more in online experience. And you see taxicabs actually starting to put out their own apps now. So, reforming some of the traditional laws and regulations would be more appropriate response. Ms. Velazquez thank you. Ms. Bruckner, if workers are found to be misclassified, what other penalties on the tax code would they then be penalized under other laws, like the fair labor standard act, as well . Mr. Bruckner our research did bruckner our research did not look at the legal implication. We thing that is a part of the we think that is a part of the debate that impacts a very small segment of the overall sharing economy. And that there are much larger and broader implications for the growing numbers of independent contractors, freelancers in general. Our research focuses specifically on the existing Tax Compliance challenges of those operating as selfemployed Small Business owners generally. There are absolutely misclassifications that occur. And they are extensive legal problems. But we are putting the onus on the Small Business owner and with the challenges are. Ms. Velazquez thank you. Mr. Chairman . Rep. Chabot the gentlelady yields back. Gentleman from new york, mr. Gibson, is recognized for five minutes. Except he is not here. Who is next on our side . Ok, the gentleman also from new york is recognized for five minutes. This is a fascinating topic. The underground economy, as you know, is growing. And part of this whole conversation has to do with noncompliance. You said 2. 5 billion of unreported potential income. But there is unity that the tax code is not encouraging this, is not caught up to the issue. So you have the governments desire to eliminate the notion of independent contractors, so they all fall under the auspices of the country that is helping them open this business, right . And yet, that does not solve the problem. Im interested that, there is an issue i mean, for the irs to go out, and people are not sending 1099s because they dont require them, who is breaking the law here . Are they looking at the credit card threshold . Theyf they are, how would even know it . Lets face it. You are saying people, people are not complying, implying they are uninformed. But we all know we have to pay taxes. We all know that if we have oweme, we go somebody we somebody something, or at least a report saying that we fell under. But i do not buy that people do not know they oh something to someone. And i do you think there is a subtle incentive to make everybody a private contractor. Because look at what you avoid. The whole fica issue, the health insurance, all of those things. So, i think it is a really, getting issue. Im interested in response you might have, ms. Bruckner. Who would not want to be like rabbit, saying they are independent contractors and we are not responsible for anybody . That would be ideal for you. You collect your percentage and move on. But yet, it is a problem. It is a big problem. Mr. Reed . Mr. Reed having been a Small Business owner, on both sides of this, i am sure i would completely agree with the concept that everybody would love independent contractors. As someone who owned a Small Business, one of the reasons i hired employees was that i could count on them to be there. As i pointed out, lots of drivers drive for both uber and poor and for lyft. You have employees in a state of competition with you, right . You are constantly having to offer incentives, find new ways to entice them to stay, not jump ship. When of the advantages you have when you own the business, is that you have the opportunity cost of having them there, but it allows you to i think we are making that decision on an ongoing basis. Taskrabbit, has employees, dont you . Thank god, i am one of them. [laughter] i agree with you. I have had hundreds of employees myself. I am new to this job, right . I get it. But we have to find a way to disincentivize the companies from doing that appropriately, inappropriately, and at the same time, find a way to help people pay what they are owed. Because the irs cannot run around chasing down everybody who owes them 500. I do not argue that we need to create the right set of incentives for both company and 1099, or taskers, as we call them. Contractors to have the right benefits and taxes. But right now, our taskers are saying they value flex ability the most. They need to be 1099 contractors. One of the factors, to however them filing the taxes or receiving training in any regard, learning have a better how to be better handymen, to be better contractors, this inability to work with them on training. And that speaks directly to one of the barriers to i think the issue were talking to today, and more broadly how to interact with his workforce in a meaningful way. Rep. Hanna do you agree with that mr. Kennedy . Mr. Kennedy i would also add that if youre talking about withholding taxes, or providing health care benefits, the economic evidence is that the employee ultimately pays for that in reduced to take home pay. It is not really the employer is benefiting. It is possibly the employee. So, i think there is one of the reasons i suggested the temporary exemption is that i think there is a real goal for the companies to come forward in certain areas and have a closer relationship with their employees. And tax is one of them. Because all the records are electronic. And so, providing the irs with the information is very, you know but the companies are afraid this will come back to bite them later, in the form of a disgruntled worker saying they were misclassified, or agency coming in and saying, they did not do this or that. Rep. Chabot the tillman is recognized hanna thank you, mr. Chairman. I get all that. What is one last thing, the Affordable Health care act, regardless of how you feel about it, it impacts that in an enormous way. People in marginal positions and income have the potential to have their cost of that particular health care grow is incredible to me. Just from what we read all the time, so thank you. My time has expired. Rep. Chabot the gentlemans time has expired. The gentle lady from california is recognized. Thank you, Ranking Members. I agree with my colleague, mr. , this is an interesting topic. And certainly, there are a lot of changes underfoot in how Small Businesses are operating, how they pay taxes, how they impact the consumer. So it is really interesting. One of the things, professor bruckner, i wanted to ask you, because you noted in your testimony that 22 of the members of the National Association of the selfemployed responded that they work with an ondemand Platform Company like uber and airbnb. Almost half did not know about any tax deductions, expenses or credits that they could claim related to the ondemand platform income. And while most of the discussion so far has been whether they are paying taxes, in general, what kind of tax reductions, expenses, or credits can be claimed for those in that industry . And also, what can we do to many better educate this group on the availability of some of these savings . Ms. Bruckner that is a great question. Starting off with the most obvious answer, when you drive for a business, in many instances, you can deduct the miles you drive. The question is, do you do actual miles . Or do you use a standard deduction formula that is in the tax code . In addition, depending on where you work, if you are selling goods online, that you produce outside of your home, can you take advantage of the Home Tax Office deduction . Are there startup expenses you might qualify under the code to extend and becoming your Small Business . It is really surprising to us that this experience, self identified itself employed population was not aware of the deductions and expenses, and even tax credits that could apply to them. Which means that they could be very well leaving money on the table when they go to file their taxes. Thank you. I was going to ask mr. Willey from taskrabbit, i know we are talking about taxes in this session, but i was just want to have the opportunity, since you are here, you know, love the Business Model, love the concept. If only our kids would do their chores, we wouldnt have to hire taskers. [laughter] but one of the concerns, that i think some of us have, is, you know, background checks of those who are now becoming taskers, coming into our homes. Can you walk us through how taskrabbit administers background checks for these taskers . Mr. Wiley sure. I think trust and safety, prolifically, is a big priority. It is important to state that, in the marketplace every day. As a number of things happen in the marketplace every day. Clearly, recruiting and or on boarding taskers is something that we look at everyday to make sure it is the best process possible. In doing so, like i mentioned, 15,000 potential taskers apply the marketplace every month. What that includes, the submission, a form online, with basic contact information, of which we then which includes social security. We do a background check, which they pay for. And based on that process, they then come in person for a one hour orientation to learn the onehour orientation to learn the processes and procedures of our marketplace, as well as how to use the tax app to answer for potential work. Hahn thank you. Im running out of time. But it is fascinating that we are talking about 35 an hour. I mean, that is like five times the federal minimum wage. That is incredible. You state thousands of applications are coming to you, without any direct recruiting or marketing. Im thinking particularly in the district i represent in los angeles, you know, there are a lot of folks who are looking for work, many of the neighborhoods are low income neighborhoods. How can you reach out to some of those other communities in our country that may be perfect to find some of these jobs . What can you do to help people find some of these good paying jobs . It is a good question. We thank you support for the city of los angeles. You are one of our biggest markets. [laughter] [indiscernible] willey i dont have any comment on that. However, i think you are right. There is more potential opportunity for us to do broader outreach, to have a broader portion of the market of the population find new work opportunities. And we consistently support that with one, a livable wage. That is most important to us. Two, the flexibility. Because 90 of our taskers do not work fulltime in the marketplace, so their love the great new work opportunities. And the third thing, most important, this idea of transfer ability of skills. If we can consistently train those that work in the marketplace with broader skill sets for them to take on, and in the future, then do bigger and broader things, not only does the existing marketplace benefit, but as the clients receive better services. The gentleman from mississippi. I appreciate you being here today. I will kind of vary a little bit. People do not like change. And governments do not like change. Some of the other comments i have heard, this is a system that works. But it is different. And i think the same thing with overtime rules with Small Businesses. What governments do not understand, they try to make it fit into their mold, their box, and the net reality is that it does not work in that box. They have to work to adapt the sharing system, and the Small Businesses, and not try to adapt them to the rules that apply to everyone else. If we do that, credit for small if we try to force Small Businesses or sharing economies to be a part of the regular tax process or agency process, what happens is you fail, because we tried to insert ourselves. We need to change, not ask you to change. What i find interesting is that the sharing economy is very tangible. The other thing i find very interesting, it applies as a secondary income, not primary. A lot of time, they are paying taxes in a primary job. They have health care in the primary job. It is very flexible. I think mr. Reed, you hit it. Flexibility is the key. We absolutely have to be flexible. Most of them are students, retirees, stayathome moms, soldiers wives. People who may be moving locations, or tied to other duties, so that flex ability of the most important. What can we, as a Small Business committee, do to make sure the people who want to pay taxes make sure they pay them . But make sure we keep open with flex ability . I start with you, miss bruckner. Ms. Bruckner we need to be educating other members of congress about the sharing economy, and the fact that it is just not millennial phenomena. If you talk to the Platform Companies, some of the fastestgrowing cohorts they see across the board are baby boomers. This is affecting all sectors of our population. Generally, these are people doing this parttime or as a secondary source of income. And hassles they have to face, combined with the tax code obligations, are something we should deftly consider moving forward, how we make life better for the taxpayer Going Forward . Rep. Chabot any other comments from the panel . I think that one of the key elements we have touched on considerably is ensuring that the irs allows us to provide the training, so that we get these people to understand their obligations. I think it is ironic, here we are having a panel about people paying taxes, and as mr. Wiley talked about, we are concerned that in order to make it easier to understand how to pay taxes, we might actually destroy the very Business Model that allows that flexibility. There is one conundrum out there that exists, and it is the idea that we can find ourselves in the wrong classification, trying to help the irs do their job. I think the sharing economy is great. Just like i think Small Business is great. I sometimes think people are threatened. If youre getting your tail kicked, you do not change rules, you get better. And you steal or copy, whatever you want to call it. You get like them. I will go back, miss bruckner, in a growing sector of the economy, is or anything this economy can do educationally to inform taxpayers, why we work to make the guidance more clear, here is what we should be doing in the meantime . Ms. Bruckner i think the one thing the irs can do is to start working through relationships with thirdparty preparers and tax preparers, educating them. In many instances, they do not even know how to advise customers that come in and need help with their taxes related to the sharing economy income. I think leveraging the thirdparty relationships, and increasing outreach and education to even tax preparers and folks that are engaged in that industry, would be a great start. Finally, mr. Reed, ill let we cant just say its better where it originates or comes up. A lot of localities and municipalities rely on that sales tax to have governments and other things that form and function and servicer people. I think we need to have a healthy discussion on that to determine what the best answer is. With that, i yield back. The chair would be remiss if i did not mention the irony of this. Left, the topic is whether or not we should impeach the irs commissioner right now. It kind of boggles your mind. Record,ng said, for the we will now recognize the gentlelady from north carolina, the Ranking Member of the investigations oversight and regulation subcommittee. Thank you Ranking Member velasquez, and to the participants today. The sharing economy is certainly a new aspect of our Economic System that we must play close attention to, in order to properly provide effective oversight, with regards to work er classification. Ms. Bruckner, to start, the classification is nothing new in labor law. In fact, last year, you saw in arizona four Construction Companies that were labeling independent contractors rather than employees to pay back wages. What makes the sharing economy harder to regulate than the traditional workforce . Ms. Bruckner i think what is difficult and unique is that when you look at tax policy purposes, you are not just looking at Companies Like lyft or uber. But we also look at it in terms of etsy and airbnb, folks you would not even think to put in the same application debate. It is much bigger when you look at how these people are earning income, and obligated to file for u. S. Tax purposes. It is a different question. And that is what our Research Endeavors to point out. There are quite a few federal and state laws that define the employee relationship, and that of the independent contractor. Is it possible a worker could be deemed an employee under one, an independent contractor under another . One law and an independent contractor under another . Ms. Bruckner i think that could happen. But misclassification happens in all kinds of circumstances. Those are issues we do not suggest specifically, but we focus really on how the taxco code is not working for american taxpayers that are just trying to earn income in the sharing economy. Thank you. So, would you know if there are tax applications for situations like that . Ms. Bruckner i would venture to guess there are, but i do not cover that in either my testimony or in the report we put out. What role does technology play in blurring the lines between an employee and an independent contractor, do you think . Mr. Reed, what about you . Mr. Reed i have the suspicion that all of us would agree that the technology we have is what empowers the sharing economy. The ability, let us use location the most obvious example. Without the ability to know the location, taskrabbit cannot know who to assign. How long will it take them . The entire function of the chair and economy works because i can pick up those spaces in between your other jobs, your other tasks, when you drop the kids off for day care. And i can it work in both space and time. Without the power your smartphone provides, we do not have the sharing economy. Would anyone like to, mr. Wallace . I completely agree with that. I think taskrabbit was founded in 2008, the first year the iphone 1 launched. That is not luck. Technology certainly empowers us, both in matching taskers with legal clients or consumers, but also Building Supply and demand to do this in a realtime, highquality experience geared both of those things are simply powered by mobile technology. Thank you. Mr. Reed, the sharing economy remodels on the infrastructure of the platform. Model relies on the infrastructure of the platform. What should the businesses do to ensure that the infrastructures growth keeps pace . We would always encourage the company to figure out ways to make it more enticing, for the people providing the service, to be a part of it. And that is down to training, providing easy access to the client you need to find. I thought it was interesting that ms. Bruckner brought up ebay, etsy, this entire business of physical goods. The key thing the platform needs to provide is easy access to a customer who wants the service. The second thing is a trustworthy space. If there is one thing that drives our ecosystem to success or failure it is the trust the client puts in it. Do i trust the person giving me a ride . How do i know the tasker coming to my house should be let in the front door . Building trustworthiness is a critical, critical element. Thank you very much. The gentleladys time is expired. I want to thank the witnesses for being here today. I have one final question. I noted that you have an office in london. I happen to be on the Foreign Affairs committee. I just wonder, how is the u. S. Doing compared to the rest of the world on the shared economy . Are we ahead of the game or behind it . If you want to comment on how things are going around the globe. I can comment on the u. K. And london specifically. As relates to our business, there is no doubt that the United States is ahead of where the rest of the world is, in terms of the cheering economy sharing economy and the adoption of services. That said, the Fastest Growing emerging markets in the world and the sharing economy are not in the United States. Specifically, for us, london is our fastestgrowing market. There are different dynamics, whether it be around taxes or health care, that create nuances as to how companies go to market. And how do they work with taskers to create new opportunities for Companies Like taskrabbit. That said, expansion is one very interesting and i think new opportunity for us, that will be done by us very carefully. Because we understand the marketplace dynamic. Where is the cutting edge around the world . Is there one company particularly ahead . I think when you look at population density, you have to very clearly see that those markets have obvious opportunities, simile based on the fact that sharing economy meets supply and demand. Companies need to meet supply and demand. And ideally, in very high population cities. So those cities, china, india, are areas where i think the cutting edge of the sharing economy is clearly looking to grow. That said, those nuances for those cities and countries are very different than the u. S. Ranking member is recognized. I would like to ask a followup. When you mentioned health care and taxes, related to london, or just the country, and why . Is related to other countries. Specifically in london, forgive me, i am not an expert in u. K. Or and i am not a lawyer. But i knowingly look at our marketplace in london, even our services, what we call our mix, is different. Our Number One Service in london is handyman services. Which is a different Number One Service than say we have in los angeles or san francisco. And part of that is based on one, the city dynamic. Two, those that are available and willing and wanting to work in that capacity. A lot of that happens to do with has to do with health care, and availability of it. It also has to do with general sort of city service behavior. We see lots of nuances between the cities, which is why we look at deploying taskrabbit globally, those are very cautious and careful decisions need to work in partnership with federal and state or country governments to do so, with always the benefit and the welfare of our taskers in mind. Thank you. In closing, i would just comment that we heard a lot of evidence here regarding the current tax law and outdated irs policies, that are illsuited to the burgeoning sharing economy and the companies and workers who are directly participating. It seems clear that we need to figure this out, and adjust accordingly. I am pleased that our distinguished plan will has panel has undertaken the task in researching and identifying many of the challenges presented, as well as suggesting possible solutions. The rise of the sharing economy is a very exciting development. And we need to ensure that our outmoded legal system does not strangle this new engine for growth in its infancy. We look forward to working with all of you, to modernize our system, to boost the economy, and increase Employment Opportunities for many americans. And i would asked for unanimous consent that the members have five legislative days to submit statements and supporting materials for the record, without objection, so ordered. If there is no further business for the community, we are adjourned. Thank you. [captioning performed by the national captioning institute] [captions Copyright National cable satellite corp. 2016] this memorial day weekend on American History three on cspan3 sherman could not have agreed more. By the time he captured atlanta in 1864, his thoughts had fully matured. A rebel army had been defeated and another major city had fallen and still the confederates would not give up. So, rather than continue the futile war against people, he would now wage war against property. Georgia historical sortie president todd gross on Union General William Tecumseh german, arguing that shermans march to the sea campaign was hard more rather than total war, and his targets were carefully selected to diminish resolve. Take it to her with Senate Majority leader mitch mcconnell, viewing some of the oldest rooms in the capital, like the Republican Leaders suite, conference room, and his private office. I had the good fortune to be her on august 28, 1963 when Martin Luther king made the i have a dream speech. Wordldnt hear i word a because i was down at this end of the mall. Thousands and thousands of people. But you knew you were in the presence of something really significant. At 8 00 on the presidency, former aides talk about the role of the president s during the vietnam era. Anguished about that war every single day. That is not an overstatement. The call body counts, either to or from the situation 3 00 inten at 2 00 or the morning to see if the carrier pilots had returned. Historian h. W. Brand is joined by a former double lb aide to explore the president s foreign policies during the conflict. Monday afternoon at 1 00 p. M. On the 1975 Church Committee hearings convened to investigate the intelligence activities of the cia, fbi, irs, nsa. We are here to review the major findings of our full investigation of f guide to mystic, including the Cointel Program and other programs aimed at domestic targets. Fbi surveillance of lawabiding citizens and groups, political abuses of fdi intelligence, and several specific cases of unjustified intelligence operation. For the complete American History tv weekend schedule, go to www. Cspan. Org. Now, a discussion on antimuslim discourse in the u. S. With two muslim members of congress. Representatives Keith Ellison and andre carson. They discuss how islamophobia is being perpetuated by the 2016 president ial race and other factors, and what can be done to stop it. From the National Press club, this is an hour. Good morning, everyone. Today we have the two muslim members of congress here to talk about the hateful rhetoric and at the followers of islam. They join a stream of government officials who have spoken in our newsmaker series. Last week congressman their jolly appeared in this room to talk about the fundraising efforts. Gop house policy chair representative luke messer was here to discuss the 2016 race and how transportation and infrastructure he chairman appears before us to talk about his faa bill. The National Press club annually has several members of congress here for journalists versus lawmakers spelling bee. I will not ask you to spell anything today, but i do thank you for being here to discuss this relevant and important topic. I will now hand over the podium to the chair of our board of governors. Good morning, everyone. Thanks for coming. My name is alison fitzgerald. Im a Health Policy correspondent at npr and chair of the board of governors at the club. If you weeks ago right here in ashington, d. C. , a woman in Starbucks Coffee shop called a fellow customer who is a muslim a quote worthless piece of muslim trash and then she poured a drink on her. Last week a man pleaded guilty to obstructing a womans freedom to practice her religion after onripped her hijab off her an airplane. These incidents are not isolated. Latest fbi crime data shows that while hate crimes are down in general, a crimes against muslims have increased. In the political arena president ial hopeful donald trump has called for a ban on allowing muslims to enter the United States altogether. Here to talk about these issues today are the only two muslim members of congress. Representative Keith Ellison is a democrat from minnesota who was elected in 2006 to represent the people of minneapolis. Congressman andre carson has represented the seventh district of indiana since 2008. We have a number of journalists listening on the phone. If any of those listening would like to ask a question, please email them to questions pres s. Org and identify your news outlet and name. Gentlemen, welcome to the National Press club. Good morning, everybody. Let me thank you for moderating. Also let me give appreciation and thanks to my good friend andre carson. When i got elected to congress, i had a few people say, this will be a fluke thing, right . It was not long before country joined me and hes the first muslim ever to serve on the house intelligence committee, which is a tremendous honor and great responsibility. Muslims are part of the American Fabric and always have been, and they are going to be. Its a happens that antimuslim hate spikes with the president ial cycle. Its not just trump. Before trump ever said that he was going to ban muslims from entering the country temporarily that did not give me any comfort, did you . Had herman cain and Newt Gingrich saying the same thing for years before that. We had sarah palin making discriminatory and intolerant comments regarding muslims before that. This political cycle that we live in is something that candidates whos want to divide americans on actually any basis that they can in order to achieve electoral success. Historical. T even in this particular race, it is certainly not trump and i hope no one makes a mistake of thinking this is about trump. Perhaps one of the scariest developments of this election is when an open wellknown muslim hater identified by the Southern Poverty Law Center as a bigot and a hatemonger, a man named frank gaffney, was put on as the cruz. De to senator also we know that dr. Carson no relation here then Carson Ben Carson said that potential syrian immigrants were like dogs, and a bunch of other hateful, scary comments. What is the fallout from all of this . These things have real consequences, and i want to just say, allison correctly pointed out some of them. There are many more. I remember when the whole ground feaux controversy controversy faux was going on. There was an occasion where a man got into a cab and asked the driver if he was a muslim. The man responded affirmatively person the person in the affirmatively. The person in the car began to stab. I know dozens and dozens of people who feel like they have been polled off airplanes, held up for hours. Its not just private discrimination, it is an official side to this as well. What do we do about it . We have to adhere to our core constitutional values. It will under law, due process of law. Fairness, religious tolerance, inclusion. Congress shall make no law establishing religion. Its in the first amendment, the same one that guarantees the right of a place like the National Press club to exist. We should adhere to our basic value system. Thats what values are. In a time where there is confusion and fear, we do the right thing by clutching our core values. That is what we must do at this time. Let me wrap up my comments and head over to entree. The Muslim Community is not taking it lying down. The Muslim Community is doing a number of things that i think are important to know. The Muslim Community is reaching out on an interfaith basis to people in the christian, jewish, buddhist, Hindu Community and saying, look, we are going to stick together. The diverse faith country of this community has responded in a positive way. I remember terry jones, the wellknown muslim hater from florida, went up to dearborn to try to have a hate rally. There were probably more christians and juice at that rally opposing him than there were muslims. The second thing the Muslim Community is doing is it is voting and becoming a voting block. Today we do not talk about the muslim vote, as we might talk about the womens vote or the black vote. There are a lot of states where the muslim vote is a critical vote. Michigan, virginia, my own district of minneapolis most of the muslim votes are somalia votes. This is an important political block in my state, the Somali Community is a critical constituency for anyone who wants to hold office