Taxes are on earnings after top-of-the-line deductions for business expenses including gas and depreciation that they'd lose on the W-2. Drivers aren't stupid as you think.
If they were employees they would be required to be reimbursed for business expenses including commercial insurance, and mileage to cover gas and depreciation.
The reimbursement requirement is baselined with respect to minimum wage, so it could be effectively $0. If it is not $0, the form would be additional W-2 pay, which is allowed by law, and this would be subject to all taxes. On top of the tax loss, calculation would not be at the generous IRS mileage rate that drivers currently exploit, but true expenses which most say are lower. Yet people continue to think drivers are stupider than they are at doing what they do every day. It's pretty fucking arrogant.
CA requires that employers reimburse employees for work related expenses, so there is no issue with expense kickback taking someone below minimum wage. Reimbursement is not earned wages, it is not taxed. It is true reimbursement could be lower than the IRS rate, but actual costs are pretty close to the IRS mileage rate in practice. Depreciation has a real cost that is ignored by many
