Editor’s note: David Potts, the author of this guest commentary, is a certified public accountant with more than 33 years experience.
The greatest threat to America’s small businesses is terrorism – domestic terrorism. If you are a business owner, this isn’t news. It has been reality for decades. It just gets worse over time.
The terrorists that threaten us are our lawmakers: our U.S House of Representatives and Senators, the President and his cabinet members, and their staff who write regulations, and even at times the Supreme Court justices.
Add to these the state general assemblies and state governors and their staffs that write regulations. Then add Fort Smith’s building inspectors to this group and you now have one of our world’s greatest destroyers of business value in the world.
The cost and unintended consequences of government regulation and collection of information about every aspect of our lives has been excessive for decades. Congress has at times tried to reduce the burden with laws such as The Federal Reports Act of 1942, The Paperwork Reduction Act of 1980, and The Paper Reduction Act of 1995. The intent of The Federal Reports Act was to reduce duplication of costs for the federal government, not the private sector. However, the two Paper Reduction Acts were intended to reduce the burden of government regulation and information collection on the private sector. I don’t know what lawmakers thought successful implementation of the Paperwork Reduction acts would look like, but I don’t think success was achieved.
For example, I downloaded from the U.S. Government Publishing Office in pdf format the Internal Revenue Code as published in 1994 and in 2013. The 1994 pdf file was 2,357 pages and the 2013 file was 3,385 pages, an increase in size of 44%. Obviously, The Paperwork Reduction Act of 1995 wasn’t all it was cracked up to be. This sample doesn’t include the regulations that interpret the Internal Revenue Code or the court cases that further define how we as U.S. citizens and expected to behave.
In addition to the IRS the normal small business with employees, with some exemptions for the smallest of businesses, are expected to comply with many other requirements such as the Fair Labor Standards Act, the Family and Medical Leave Act, the American Disabilities Act, and the Federal Wage Garnishment Law. Then there is Arkansas’ Department of Labor that proudly publishes links to Arkansas Code Annotated Title 8 – Environmental Law; Title 11 – Labor and Industrial Relations; Title 17 – Professions, Occupations, and Businesses; Title 20 – Public Health and Welfare; and Title 22 – Public Property. Then there are bank laws and regulations, securities laws and regulations, immigration laws, and consumer protection laws.
And everybody in the country is now having to deal with the complexity and reporting requirement of the Affordable Care Act.
Over the years, there have been attempts to estimate the cost of government regulation on American business and consumers, but these are just guesses. It has to be astronomic. The real cost is the lost time and energy of entrepreneurs and business owners that could be focused on productivity and job creation.
Everything that I have said above has been said and regurgitated by probably every person that is reading this article. So ask yourself this question, “Why are we allowing a factional, uncooperative and ineffective government to bully us?”
I believe in the need for laws and I believe in the need for rules. However, what good are laws and regulations when there are too many to learn and too complex to understand? The result is that businesses live in a culture of uncertainty, and uncertainty increases perceived risk. Perceived risk alters a person’s behavior and choices. The consequences of over regulation is less investment, less innovation, less jobs, less compliance … less of everything except stress.
Politics are dirty, but laws and regulations are the creation of politicians. Most business owners and business managers work 60 hours a week and participating in political activity is the last activity most would care to engage in. But if there is any hope for changing our regulatory environment, small business owners need to get politically active.
It is time to get dirty, you’ve been taking an economic bath for years.