Skip to comments.Taming the Regulatory Tax
Posted on 01/11/2014 10:03:05 AM PST by Kaslin
Every American knows about the income tax. But how many are aware of the regulatory tax?
Thats the cost of all regulations (good, bad and indifferent) imposed on Americans by the 60 or so government agencies that contribute to the 175,000-page (and growing) Code of Federal Regulations.
The fact that we dont hear nearly as much about the regulatory tax doesnt mean it isnt substantial. As Heritage Foundation scholar James Gattuso notes, While the revenues and expenditures of the government are accounted for each year, the costs of regulation are largely hidden from view, paid for indirectly via higher prices, fewer choices, and less innovation.
Regulators were busily up to mischief throughout 2013. Gattuso and Heritage scholar Diane Katz recently compiled a list of the worst regulations of last year. They include:
Your microwave: The Energy Department finalized a rule limiting the energy that microwave ovens may consume when in stand-by or off mode. All in a days work for regulators, but in the cost-benefit analysis they used to justify the rule, they overestimated the value of reducing carbon emissions by 50 percent. This bloated number allowed not only greater regulation of microwaves, but also tighter rules on any carbon emissions anywhere, Gattuso and Katz write.
Your food: Consumption of trans fats is down 78 percent in recent years. But dont thank regulators. It happened how its supposed to happen in a free market: consumer demand led food manufacturers to reformulate their products. But thats not enough for the FDA: they want to ban trans fats entirely, arguing that any amount is dangerous. The FDA estimates the initial cost of the ban to be about $8 billion.
Your Christmas tree: In its version of the $1 trillion farm bill, the House approved a provision that requires the Department of Agriculture to impose an assessment of 15 cents on every fresh Christmas tree sold. Why? To fund a promotional campaign for the industry. This is absurd on its face: the Christmas tree industry hardly needs help selling such a popular product. And if this sounds familiar, thats because it is: its the same program the department wanted to impose in 2011 until public outcry led to its withdrawal.
Your health: A key part of Obamacare is the new coverage requirements for individual health insurance policies. Required services for all policies range from maternity care (regardless of gender) to substance-abuse treatment to pediatric care (including for the childless). As Gattuso and Katz point out: In practice, this mandate turned out to be the regulatory equivalent of New Coke, causing millions of Americans to lose their insurance policies, despite presidential assurances that if you like your plan, you can keep your plan.
Regulations often do more harm than good. For example, efficiency standards govern almost every appliance we buy, from battery chargers to water heaters. And many of them sound benign. But they're no friend to the consumer. In many cases, writes Katz, efficiency standards increase the price of appliances by more than consumers will recoup from the energy savings.
Fuel economy standard are no better. By increasing the cost of new cars, they cause more drivers to stick with older, less fuel-efficient vehicles. And research shows that by lowering the per-mile cost of driving, fuel standards actually induce people to drive more -- defeating the purpose of having the standards in the first place.
There is no magic bullet to lower the regulatory tax. But it can be tamed. Americans need to recognize that the hidden regulatory tax constitutes a major problem, and to demand that their senators and representatives finally address it. Honesty, hard work, thrift and transparency -- not gimmicks and gotcha regulations -- are the true hallmarks of the American spirit.
Its like paying to be infested with tapeworms, fleas, and ticks.
We’re governed by lawyers.
Lawyers make laws to keep other lawyers in jobs.
There’s no turning back until the revolution....
We can’t hardly tabulate all of those kinds of costs. I would love to see companies put the cost of their taxes on the receipt.
Like that $2 bottle of soda sure the sales tax is 14 cents but much of the price of the soda is also government.
I got my tree for free, will a SWAT team break down my door and demand I pay fifteen cents?
Look at the way we tax manufactured products. Its like a VAT tax and its only reason is to maximize revenue to government.
I’ve never seen a factory that didn’t cheat by hiding inventory and I don’t blame them a bit. The parking lot of the last factory I worked in would fill up with trailers full of parts from neighboring factories. Our trailers full of parts would be in their lots listed as “in transit” for tax purposes.
After inventory everything would go back to where it belonged.
Its like the old lady who swallowed a fly. I don’t know why. I guess she’ll die.
They tax the land that holds the ore, they tax the mined ore, they tax the refined metal, they tax the machined screw, they tax the part the screw goes into.....
Are you sure that was cheating?
It may simply be abiding by the technical reading of the regulations.
Remember, the stupid people are in Washington and the state capitals, the smart people are in corporate offices.
The cost of regulations also shows up as hidden costs of legal liability...such as ladders and gasoline containers.
True enough. Technically they were in transit because they were in the trailers and off the property.
They were generally unfinished parts that would be taxed if counted with the rest of the inventory.
Agreed - it’s the responsibility of a corporation to pay as few tax dollars as legally possible. What was described was absolutely legal.