PHOENIX — In Arizona and across the country, small business owners and entrepreneurs spend billions of dollars and countless hours complying with regulations. But a new recommendation from the Goldwater Institute could offer these businesses help – and boost the jobs outlook along the way.
Countless regulations add complexity and cost to the basics of running a business. Raymond Steeves, co-owner of Three Dudes Quilting in Maricopa County, jumped through four months of regulatory hoops to hang a simple sign advertising his store in an established shopping mall. In another example, Tucson regulators made politically-motivated changes to the building code that diminished the supply of hard-to-find student housing and targeted a single developer’s livelihood.
“Local governments can make these outlandish claims because they enjoy a huge advantage,” said Nick Dranias, a researcher with the Goldwater Institute. “Because of their vast resources, funded by taxes, they can outlast most private citizens and businesses in expensive litigation.”
Across the nation, the cost of regulation is massive: At the state level, in California alone, it was recently estimated at nearly $500 billion a year. Federal regulations have been estimated to cost $1.75 trillion per year, roughly 14 percent of total national income. These regulations slow economic activity and prevent the creation of jobs and wealth.
The problem, Dranias says, is that government has little reason to stop overregulating. But there is a powerful way to give government the missing incentive it needs — the regulatory tax credit.
“This proposed credit would allow taxpayers to reduce their taxes in an amount equal to the cost of complying with excessive regulation,” Dranias said. “That single change would force policymakers to consider the costs of new regulations and ensure they are truly for public health and safety.
“The regulatory tax credit would also be a powerful job-creation tool. By discouraging overregulation, businesses would be freed to invest and hire.”
Click here to read The Missing Reform: Regulatory Tax Credits.
The Goldwater Institute is an independent government watchdog that develops innovative, principled solutions to issues facing the states.