Regulations

As I gear up for my 11th year of volunteering at the senior center to file taxes for people, I am once again reminded of the complexity of the tax code. Back in 2002 a big company named Enron cooked their books and caused a financial disaster for its stockholders and employees. They got away with this because they hired Arthur Anderson an outside accounting firm that colluded with them to cheat. To make sure this didn’t happen again the congress passed the Sarbanes/Oxley bill which is an 88 page document that has caused no end of problems for small companies who must hire experts to interpret the rules. In 2010 after the mortgage loan fiasco the congress passed the Dodd/Frank bill containing 2,600 pages of regulations which have hurt small community banks. These banks are overwhelmed trying to figure out the intricacies of this massive document. Before Dodd/Frank the five biggest banks held 10% of assets and after Dodd/Frank they now hold 50% of assets. So much for too big to fail which was the stated purpose of the law! The pages in the law are only a small part of the problem because after congress passes the law the various departments must implement and this takes many more pages. For example Obamacare is 2,700 pages but the regulations are now up to 20,000 pages with more on the way. We are provided with a separate booklet just for Obamacare. By the way the income tax code now has over 70,000 pages of regulations. Small companies once again must hire experts to file. The report broke down total Federal regulatory costs of $2.028 trillion this way: $1,448 billion for "economic" regulations, $330 billion for "environmental" regulations, $159 billion for "tax compliance" regulations, and $92 billion for "occupational safety and health, and homeland security (OSHHS)" regulations. This equates to $10,000 per employee or 12% of GDP. Maybe we can do more with less!