With the rise of Uber, Lyft, and other ride-sharing apps, the taxi industry has been on the decline. In an effort to save said failing industry, the state of Massachusetts will become the first to begin imposing a fee (aka tax) on every trip arranged via a ride-sharing service. Massachusetts will then use the money generated from this fee to subsidize its taxi industry.

“Massachusetts is robbing Peter to pay Paul, who also happens to be Peter's direct competitor,” said Robby Soave in an article for Reason.

The state’s “MassDevelopment” agency has been tasked with deciding how best to use the money to help the taxi industry. One proposal is to assist taxis with developing and adopting new technologies.

“Which probably means using an app to hail a cab,” Soave suggested. “So Massachusetts is robbing Peter to pay Paul so that Paul can learn how to do the thing Peter already does.”

Unfortunately for the ride-sharing services, they are essentially forced to accept the fee. And unfortunately for customers, the fee will most likely be passed along to consumers, as Uber will probably end up raising their prices, thus absorbing the fee.

It is exactly this type of government intervention that has resulted in the development of crony capitalism, which operates under the disguise of a free market economy. This in turn leads many people to blame corporate corruption on capitalism and to demand more government regulations, which typically do more to worsen the problem.

“Taxing Uber to save taxis is economic idiocy, plain and simple,” Soave said. “There's just no good reason for the government to prop up firms that can't succeed in the marketplace on their own: particularly if the government is going to sabotage more successful firms in order to protect the outdated ones.”

The bill was passed in the Massachusetts state legislature earlier this month and was officially signed into law by Republican Governor Charlie Baker, who is clearly confused about what the free market actually is, earlier this week.

As of now, Uber has avoided criticizing the tax, saying in a statement, “We are grateful for Governor Baker’s support and the legislature’s effort towards creating a framework that embraces an innovative industry that has changed the way the Commonwealth moves. We look forward to working with the Administration to implement the law to ensure it increases transportation options and economic growth.”