NEW YORK - For many years, New York City taxi medallions were considered a solid investment. But their value has plummeted with the advent of app-based ride-hailing companies. Now many medallion owners say there are left with massive debt and dwindling earnings.
A City Council task force on the taxi medallion crisis is endorsing a debt-forgiveness plan because medallion prices were artificially inflated at auction. The details of the proposal are still being worked out.
Council Member Ydanis Rodriguez would not confirm the particulars but said the plan hinges on private companies buying medallions at discounted prices. This would ease the burden on borrowers by forgiving the debt and lowering interest payments.
Under federal law, debt forgiveness is considered income. So medallion owners could be on the hook for huge tax bills. Rep. Gregory Meeks, D-N.Y., said in a statement that he hopes legislation could deal with that problem.
"Taxi drivers were lured with a false promise, and now suffer from crippling debt they'll never be able to pay. Thankfully some financial institutions are trying to do the right thing by waiving their medallion debt," Meeks said. "My legislation I'm revealing tomorrow would fix that and give crucial tax relief to drivers who're looking to finally move on with their lives."