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State Assembly Vote Could Make Milwaukee’s Bad Taxi System Worse

Minneapolis, Minn.—On Tuesday, February 21, the Wisconsin State Assembly will vote on Bill 529, legislation designed to turn Milwaukee’s anti-competitive taxi market into something even worse: a New York City-style medallion system. If passed, the Milwaukee Common Council would be able to enact a system where taxicab licenses would be allocated by auction to the highest bidder.

“The Milwaukee taxi market is desperately in need of reform, but all this bill does is make a terrible system even worse,” said Institute for Justice Attorney Anthony Sanders. IJ filed suit against the city in September on behalf of three local taxi drivers to open Milwaukee’s transportation market. “No one thinks it would be a good idea for entrepreneurs to purchase an expensive medallion before opening a restaurant, a painting company or a print shop. Why should taxicab entrepreneurs need to do this?”

In 1991, Milwaukee officials prohibited any new entrepreneurs from entering the taxi market. The city council arbitrarily imposed a hard cap of 321 taxis for the entire city, and made it so that the only way to get a taxi permit was to purchase one from an existing permit holder. By outlawing competition, the price for permit has risen from $85 to a staggering $150,000—more than the average cost of a house in Milwaukee. The proposed medallion system would likely make it even more difficult for aspiring entrepreneurs to enter the taxi market. In New York City, taxi medallions now sell for over $1,000,000.

“Creating a medallion system would be a boon to the existing taxi cartel by guaranteeing that only the rich and powerful can own taxicabs in Milwaukee,” said Sanders. “The solution is easy, simply open the market. Instead, the government wants to continue playing favorites.”

The Milwaukee Journal Sentinel editorialized recently that “Milwaukee’s cap on taxicab permits makes little sense. The city needs more transportation options, and cabs should be one of them. . . . Lift the cap, and let the market decide.”

As explained in an Institute for Justice study, Unhappy Days for Milwaukee Entrepreneurs, the city’s current taxi law does nothing but funnel money to a small group of entrenched businesses at the expense of entrepreneurs, who lose out on opportunities, and at the expense of consumers, who face poor service and long wait times.

The Institute for Justice has helped open taxi markets in Denver, Indianapolis, Cincinnati and Minneapolis and for 20 years has been the nation’s leading legal advocate for the rights of entrepreneurs. For more on the lawsuit to open Milwaukee’s taxi market, visit www.ij.org/MKETaxis.

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