Regulatory ‘Taxation’ Burdens Us All
Government costs Americans far more than the taxes we pay, because direct taxes don’t include regulatory compliance costs. Compliance costs are built into the prices of goods and services purchased by American consumers, including by those who pay no income taxes. Regulatory costs are hidden “taxes” on consumers that strain family budgets and slow economies.
In their review of the cost of government regulations for 2018, the Competitive Enterprise Institute estimated the cumulative cost of complying with federal regulations to be $1.9 trillion – or about 15 percent more than Canada’s total economic output.
Last year, on average, regulations added about $14,600 annually to American household budgets, roughly a fourth of median household incomes. Regulatory “taxes” exceeded every item in household budgets except housing – more than food, transportation, entertainment and savings. Most are imposed without constitutional authority by unelected, faceless, largely-unaccountable federal bureaucrats. The Constitution’s Appointments Clause requires that federal agencies’ binding rules must be approved by “officers of the United States” – presidential appointees confirmed by the Senate or their politically-accountable agency hires. The Pacific Legal Foundation estimates that, from 2001 to 2017, nearly three-quarters of the rules reviewed never received the constitutionally-required signoffs. Career bureaucrats who issue and enforce regulations have become a functionally-independent, extra-constitutional fourth branch of government.
President Donald Trump attempted to rein in federal agencies with instructions to eliminate two outdated regulations for every new one. In 2018, the Trump administration issued 3,368 rules, in 2017, 3,281 – the lowest since record-keeping began in the 1970s. Accordingly, regulatory compliance costs will be cut by roughly $50 billion by end-2019. But, last year, new regulations still exceeded new congressional legislation by eighteen times.
Deregulation has contributed to job creation and America’s booming economy, because, not only does overregulation create artificial inflation by increasing the costs of the products Americans purchase, the business resources necessary for compliance displace actual production. Removing unnecessary government impediments to business and industry is essential to job creation, productivity, worker incomes and American competitiveness in global markets.
To keep our economy strong, America’s business regulatory burden must be continuously reassessed and the regulatory environment reformed. But, federal agencies and, occasionally, activist jurists have resisted sensible deregulation. For example, courts blocked President Trump’s EPA from repealing Obama-era ozone regulations which informed critics consider among the most expensive and unnecessary air regulations ever imposed.
Regulations also limit personal liberties. Bureaucratic edicts create a maze of often-trivial, sometimes-frivolous government approvals, permits and oversights, thousands of which insult Americans by restricting their freedom to make informed, voluntary, personal decisions about food, energy, education and healthcare, and many others.
In order to improve real income and living standards for lower and middle income Americans, strengthen our currency and improve trade balances, America must, among other priorities, make sure the free-market private sector is the largest, fastest growing portion of the national economy.
Sensible regulations can – do – protect consumers, investors, workers and the environment – and Americans should follow the rules.
But, first, binding rules should be constitutional – and make sense.
