28 Sep 2010

Federal Regulations: A 14% Tax on National Income

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Ever have a personal experience of some irrational and unnecessary federal regulation?

I can remember, decades ago, when I was still a student working at factory jobs during the summer, spending weeks and weeks installing OSHA-mandated improvised barriers on machine tools of every sort.

The activity was pointless. The rods, bars, and pieces of sheet metal I was attaching were simply nuisances that would only get in the way. No one wanted them. No one needed them. No one thought they were desirable. But someone in Washington, undoubtedly someone who had never operated a machine tool or worked in a factory, had decreed that a symbolic sacrifice of convenience and efficiency to the safety gods must be performed, and every factory and machine shop in the land was obliged to genuflect and sacrifice.

Nicole V. Crain and W. Mark Crain, in the Wall Street Journal explain that regulations have continued to increase over the years, by now amounting to a serious portion of our national income.

The annual cost of federal regulations in the United States increased to more than $1.75 trillion in 2008, a 3% real increase over five years, to about 14% of U.S. national income. This cost is in addition to the federal tax burden of 21%, for a combined cost of 35% of national income. One out of every three dollars earned in the U.S. goes to pay for or comply with federal laws and regulations, and new policies enacted in 2010 for health care and financial services will increase this burden.

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