Taking on the Taxi Cartel

J. Justin Wilson
J. Justin Wilson · September 26, 2011

Minneapolis, Minn.—Should the city of Milwaukee be allowed to outlaw competition in the taxi market, causing permits to rise in price from $85 to a staggering $150,000?

That is the question to be answered by a major lawsuit filed today by the Institute for Justice (IJ)—a national public interest law firm—and three Milwaukee taxi drivers: Ghaleb Ibrahim, Jatinder Cheema and Amitpal Singh. The IJ attorneys and clients will be available for interviews immediately following today’s 10:00am news conference at the Milwaukee County Courthouse.

“In the classic story of entrepreneurship, someone starts a taxi business in order to save up enough money to buy a house,” said IJ Staff Attorney Anthony Sanders, lead counsel in today’s lawsuit. “In Milwaukee, you need to save up enough money to buy a house just to start a taxi business.”

In 1991, the city of Milwaukee prohibited any new entrepreneurs from entering the taxi market. The city council 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. As a result, today the city has just one taxi for every 1,850 residents (compared to 1 in 90 for Washington DC and 1 in 480 for Denver) and taxi permits have risen in price from $85 to $150,000—more than the average cost of a house in Milwaukee.

As explained in an Institute for Justice study, Unhappy Days for Milwaukee Entrepreneurs, the city’s 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. One taxi owner owns almost half the city’s taxi permits.

“It isn’t the government’s role to play favorites, protecting a special few from competition,” said Sanders. “If the government tried to artificially limit any other industry, saying only 30 restaurants or three hardware stores could operate in town, everyone would agree it’s completely arbitrary and wrong.”

“I should be able to apply for a taxi license just like all the other licenses that the city offers,” said IJ client Ghaleb Ibrahim. “All that I want is to own my own business.”

The Institute for Justice has helped open taxi markets in cities across the country, and for 20 years has been the nation’s leading legal advocate for the rights of entrepreneurs. For more on today’s lawsuit, visit www.ij.org/MKETaxis. IJ is also available on Facebook, YouTube and twitter.