Monday, May 26, 2008

Govt - Worst Enemy of Small Business

Over-Criminalization of Small Business Laws

Small businesses are required to comply with more than 75,000 pages of federal regulations, and more than 27,000 of these pages of regulations carry criminal penalties. Unfortunately, an increasing number of well-meaning, unsuspecting small-business owners are being convicted and serving jail time for regulatory crimes and small business laws they did not even know existed. In addition to facing criminal prosecution for not complying with U.S. regulations, small-business owners can face criminal prosecution for violating foreign regulations of which they might not have been aware. The NFIB Small Business Legal Center is fighting the trend to over-criminalize regulatory violations.


State of the Union: Small Business, Large Regulation

Regulation imposes a huge burden on consumers and the economy. While precisely calculating regulatory costs is difficult, a recent study performed by economists Thomas Hopkins and Mark Crain for the Small Business Administration estimated that regulations cost Americans $843 billion in 2000, or some $8,000 per household – close to what Americans pay in income taxes.

The same report found that small businesses, historically the most effective creators of new jobs, bear a disproportionate share of this cost. Hopkins and Crain estimate, for instance, that firms employing 20 people or less face regulatory costs of almost $7,000 per employee, compared to about $4,500 for the largest firms.

Wayne Crews of the Competitive Enterprise Institute

Crews is working on this year's edition of CEI's "10,000 Commandments," an assessment of the regulatory state. He notes that the Small Business Administration estimates the cost of federal regulations to U.S. businesses - an indirect tax - at about $1 trillion a year, more than a third of the direct cost, at $2.7 trillion, of the federal budget. The Federal Register, the official record of new regulations, weighs in at 75,000 pages a year of new rules and mandates that Congress doesn't review.

Streamlining (and eliminating) regulations would do much more for U.S. competitiveness across the board than subsidizing the production of scientists and mathematicians and tinkering with the tax code. It wouldn't hurt to make it easier to hire people rather than more complicated. Then we can look at reducing taxes across the board.

Innovation comes less from official guidance than from unexpected breakthroughs and applications by mavericks and established companies alike. The best way to facilitate it is through freedom rather than central planning.

States and Small Business Health Insurance: An Overview

Small businesses are driven crazy by soaring employee health costs, an expense that surveys show has become the biggest headache and obstacle to growth. Now, a growing army of consultants and benefits experts are promoting new health plans and services aimed at owners desperate to rein in costs.


The Double Trouble of Taxation

The burden of complying with the income tax is tremendous. Since its inception in 1913, the tax code has gone from 400 pages to over 67,000. The Tax Foundation estimates that around $265 billion dollars and 6 billion hours are spent just on compliance. That expense amounts to about 22 cents of every dollar the IRS collects. Imagine the boon to the economy if we spent that time and money expanding our businesses and creating jobs!

Aside from the direct loss of money and productivity, the funds from the income tax enable the government to do some very destructive things, such as vastly over-regulating economic activity, making it difficult to earn money in the first place. The federal government funds over 50 agencies, departments and commissions that formulate rules and regulations. These bureaucracies operate with little to no oversight from the people or Congress and generate around 4,000 new rules every year and operate at a cost of about 40 billion dollars. There are some 75,000 pages of regulations in the Federal Register that Americans are expected to know and abide by. Complying with these governmental regulations costs American businesses more than one trillion dollars per year, according to a study by Mark Crain for the Small Business Administration. This complicated system drives production to other countries and shrinks our job market here at home.


3 comments:

yogijp said...

http://idlinginc.blogspot.com/2008/06/small-business-and-state-taxes.html

http://idlinginc.blogspot.com/2008/06/business-llc-and-h1b-altvisaus-google.html

Also, health Insurance

Tax withholding

yogijp said...

The Curse of the Withholding Tax
http://mises.org/story/1797

The Origin of Tax Withholding
One of Friedman's most disastrous deeds was the important role he proudly played, during World War II in the Treasury Department, in foisting upon the suffering American public the system of the withholding tax. Before World War II, when income tax rates were far lower than now, there was no withholding system; everyone paid his annual bill in one lump sum, on March 15. It is obvious that under this system, the Internal Revenue Service could never hope to extract the entire annual sum, at current confiscatory rates, from the mass of the working population. The whole ghastly system would have happily broken down long before this. Only the Friedmanite withholding tax has permitted the government to use every employer as an unpaid tax collector, extracting the tax quietly and silently from each paycheck. In many ways, we have Milton Friedman to thank for the present monster Leviathan State in America.

Srinivas said...

Learnt all this through experience JP?