regulatory burden

Tax Freedom Day

by Ryan Young on April 9, 2010 · 1 comment

in Deregulate to Stimulate, Economy, Regulation

Today, April 9, is Tax Freedom Day. The good folks at the Tax Foundation calculated how much money local, state, and federal governments harvested last year from taxpayers ($3,469,000,000,000), and compared that to national income ($12,901,000,000,000). At 26.89 percent of national income, you basically work until April 9 just to pay off your taxes.

April 9 is the national average; different states have different tax burdens, so Tax Freedom Day actually varies from state to state. If you live in Alaska, you already celebrated Tax Freedom Day on March 26. But if you live in Connecticut, you have to keep the champagne on ice until April 27.

That isn’t the whole picture, though. The federal government spends far more than it taxes. $1,414,000,000,000 more, last year alone. The burden of federal deficit spending adds another 40 days. Not even counting state and local deficit spending, that puts us out to May 19 by my calculations (May 17 by the Tax Foundation’s).

Even that’s not all. The hidden tax of federal regulation cost businesses and consumers an additional $1,187,000,000,000 last year, according to Wayne Crews’ soon-to-be-released 2010 edition of Ten Thousand Commandments (previous editions are online here). None of that extra trillion-plus actually shows up in the federal budget. Regulation eats up an additional 9.2 percent of national income, or 8.3 percent of GDP. So you have to work an additional 34 days until you pay off the federal regulatory burden.

It’s tempting to brush off regulatory costs, since most of them are borne by businesses. But remember, businesses pass on their costs to consumers. You pay for the regulatory state. Its costs are real.

Adding together total taxes, plus federal deficit spending, plus federal regulations pushes us out to June 22 by calculations, or June 20 by the Tax Foundation’s.

And remember, that’s leaving out state and local deficit spending. Nor does it count state and local regulations. I don’t have the data handy for that. But if they add up to at least $460,000,000,000 then we’re past the half-way mark of the year. Just to pay for government.

Even using the larger number of GDP ($14,253,000,000,000 in 2009), and leaving state and local deficit spending and regulation, we’re still talking 42.9 percent of the economy going to pay for government. That’s 157 days out of the year. You’re not free until June 6 even by that generous measure.

I’d argue that government has grown too big, but the data have already done that for me.

Regulate First, Think Never?

by Iain Murray on January 15, 2009 · 6 comments

in Environment, Nanny State, Politics as Usual, Precaution & Risk, Regulation

Twitter can be very useful. Walter Olson of Overlawyered.com sent out a tweet this morning about an Amazon list of toys that will be affected by the Consumer Product Safety Improvement Act of 2008, which comes into effect February 10. This new law aims to protect children from the harmful effect of lead in toys, but does so, as usual, in an expensive and ham-fisted way that ignores unintended consequences. Intrigued, I researched further and found a classic tale of regulatory incompetence, but also an excellent example of resistance by the little guy (or often more gal, in this case).

The law, as written, appears to require makers of any new toys to be sold after February 10 to have a third party certify that they meet the lead restrictions. This will be ruinously expensive for small toymakers, especially those of traditional, hand-made wooden toys. No wonder that these manufacturers have taken to calling February 10 National Bankruptcy Day. They have, however, been very effective in using the blogosphere, specifically the “mommy blogs” to draw attention to the cause and have managed to make quick reform of the CPSIA the number six policy to be presented to the new President as voted on by users of Change.org. Investigative journalism by BusinessWeek has confirmed that the small businesses have reason to be afraid, as there has been no clarification from the CPSC that their fears are unjustified (a “debunking” at Snopes applies only to used toys, which will indeed not require testing, but their resale may still break the law).

This is an excellent example of how consumers and manufacturers, self-organizing, can alert people to the terrible consequences of well-meaning but ill-thought out regulation, and of how the regulatory burden can severely affect small businesses especially. The campaigners have a twitter stream at #CPSIA, which is full of useful links.

More from Forbes here, but note that some of the campaigners believe the exemptions cited are worthless.

The Real Auto Bailout: A Six Point Plan for Regulatory Relief

by Iain Murray on December 19, 2008 · 5 comments

in Bailout Watch, Energy, Mobility

Here’s what the auto companies really need – a reduction in the regulatory burden placed on them by Congress. These burdens have placed Detroit at a competitive disadvantage because a lot of them are aimed at eliminating the sort of vehicles that Detroit has proved adept at designing and marketing.

1. Repeal the CAFE requirements. They restrict consumer choice by insisting that fuel economy take precedence over safety, and impose restrictions on design that reduce the competitive advantage of Detroit automakers. If reduction in fuel use is a necessary policy goal – and CEI would contend that it is not – there are other policy vehicles to use that would not impose direct costs on the automakers or restrict consumer choice. Moreover, by reducing the weight of vehicles, CAFE removes the single most cost-effective safety design feature there is. It would also remove the ludicrous “two fleet” rule that uniquely hampers US automakers.

2. Reduce the burden of safety legislation. There are too many safety rules on the books that are actually counter-productive, like mandated air bags. Consumers should be free to pick from a “menu of safety options,” taking their own individual circumstances and preferences into account. This should not be taken as a suggestion that automakers should be free to build cars that explode on ignition, but that there is a range of safety considerations that range from safe to extremely safe, and at present we are mandating too many “extremely safe” features while at the same time perversely reducing safety though CAFE (see point 1 above). Again, the Detroit manufacturers feel these more intensely than other manufacturers because of the sort of vehicles they have specialized in.

3. Halt the march of further design regulations. There are plenty of examples here.

4. Remove the artificial barriers to merger represented by too strict interpretations of antitrust law. This will enable GM and Chrysler to merge.

5. Allow automakers and, indeed, all firms to repatriate foreign profits without having to pay a double tax. This will provide a much needed injection of funds. No other country handicaps its manufacturers in this way.

6. Suspend particulate matter regulations emanating from California that prevent the automakers selling high-mileage diesel-powered cars that sell well in Europe and meet all European emissions requirements. This will immediately reduce fuel usage and reduce unnecessary research and design costs.

Taken together, this deregulatory bailout package would restore Detroit’s competitive advantage and obviate the need for taxpayer money. Congress has hurt Detroit with these rules. It should recognize that and remove them, rather than hurting taxpayers as well.