The following is co-written by Gabriel Latner, a legal associate at the Cato Institute.
The fight between New York Attorney General Eric Schneiderman and Airbnb, the company that allows people to rent their sofas and guestrooms to out-of-towners, is reaching new heights. Airbnb just launched a clever ad campaign to get Gotham’s incoming mayor on its side: A video featuring New Yorkers offering to host Bill de Blasio’s friends and family during his inauguration.
To bring you up to speed, in October the AG subpoenaed the personal information of more than 15,000 New Yorkers in order to enforce hotel zoning laws and occupancy taxes, as if Airbnb hosts were running a Marriott or Hilton out of their Hell’s Kitchen apartments. The company fought back, arguing that even if the subpoena would uncover cases where hosts broke the law, it would also ensnare thousands of law-abiding users — the equivalent of searching an entire neighborhood after anonymous reports that one neighbor is selling drugs.
The case now awaits a judicial ruling, but legal merits aside, Schneiderman’s pursuit of every-day New Yorkers for running “illegal hotels” is symptomatic of a larger problem: the implications of the government’s regulatory and taxing power on individual privacy.
Once the government is allowed to regulate a certain activity, it will necessarily begin to monitor it. Just look at the tax code. To comply with the ridiculously complex hodge-podge of rules, law-abiding citizens have to provide bureaucrats with minute details on every aspect of their lives.
The zoning laws and occupancy taxes Schneiderman wants to enforce are no different. Actually, they’re more invasive in the Airbnb context. That’s because they only apply when someone is renting out space when they’re not home — giving the government a reason to insist people tell them where and how they spend their time. The “hotel regulations” regular people are expected to comply with for hosting through Airbnb also require the details of their credit cards, PayPal accounts, and other information that would surprise both the IRS and NSA.
Schneiderman has attempted to rally support for his campaign for private information by portraying his victims as tax-dodging crooks who’ve cheated the city out of tens of millions of dollars in taxes.
On the contrary, most Airbnb hosts are only guilty of trying to make ends meet. Take Evylen Badia. She was able to keep her home in Brooklyn after being laid off thanks to the income from Airbnb. In an uncertain job market, Evylen knew she’d “be safe financially because I had guests arriving.” Kimberly Kaye has a similar story; renting her apartment out “for a few days each month … provided immediate, safe and practical protection from homelessness.”
Aside from actually threatening the livelihoods of struggling New Yorkers, Schneiderman’s pursuit of Airbnb could be bad for New York’s economy. That’s right, by discouraging the middle-class tourists who use Airbnb, the state stands to lose more in sales tax than it will make by collecting its “hotel” tax.
Perhaps the AG is less interested in (meager) tax revenue than in shutting down a competitor to the state’s politically powerful hospitality sector, which, it’s worth noting, has donated tens of thousands of dollars to his campaigns over the years.
But again, even if Schneiderman’s efforts didn’t reek of protectionism, his relentless prosecution should still be opposed as a gross invasion of privacy.
While taxes are unavoidable if we want to have a government that secures and protects our rights, the Airbnb episode shows that they need to be structured in a way that minimizes constitutional intrusions. Take a flat percentage of all income, regardless of how derived, say, or get rid of income taxes altogether and just rely on a uniform sales tax. Regardless of your preferred system, if collecting taxes also requires the collection of highly sensitive personal information, you’re doing it wrong.
After all, the Supreme Court has rightly held, again and again, that the home is special, containing a privacy that the state violates at its peril. As Justice Louis Brandeis wrote in one of his most powerful opinions: “The principle underlying the Fourth and Fifth Amendments is protection against invasions of the sanctities of a man’s home and privacies of life.”
Surely those protections extend to queries regarding how people bank and where they spend their nights. Sounds like just the sort of thing that should pique the concern for civil liberties that animated the new mayor’s campaign. Maybe Hizzoner ought to watch Airbnb’s video and push back at Albany.
Ilya Shapiro is a senior fellow in constitutional studies at the Cato Institute, where Gabriel Latner is a legal associate.
