Latest “Ten Thousand Commandments” Highlights Hidden Tax System

Every day, millions of American households and businesses have to deal with a growing thicket of regulatory red tape and hidden taxes. Fortunately, the Competitive Enterprise Institute’s (CEI) annual “Ten Thousand Commandments” report provides a comprehensive overview of the U.S. regulatory state, quantifies its costs, and documents changes in rulemaking. CEI Vice President for Policy Clyde Wayne Crews, Jr. notes in the 2020 version that, “as imposing as that is, the cost of government extends even beyond what Washington collects in taxes and the far greater amount it spends. Federal environmental, safety and health, and economic regulations and interventions affect the economy by hundreds of billions—even trillions—of dollars annually.”

First, the good news. Despite bureaucrats’ ever-present appetite to promulgate new and expensive rules, the Trump administration has prioritized pro-innovation regulatory reform. For fiscal year (FY) 2019, the administration nixed 1.7 “economically significant” rules (with an annual economic impact of $100 million or more) for every new significant rule ushered in. The Trump administration has streamlined rules on everything from 5G deployment to agricultural biotechnology to affordable housing construction. Since 2017, the administration has delayed or withdrawn an astounding 1,570 Obama administration rules in the pipeline which would’ve imposed large costs on producers and entrepreneurs.

Furthermore, the Trump administration eliminated or rolled back 150 completed regulations in FY 2019 alone. CEI documents these recent deregulatory actions and finds present value savings of $13.5 billion for taxpayers and consumers. Total deregulatory savings under the Trump administration (including projected 2020 figures) are estimated to be $96 billion, or approximately $750 for each household in America. There is, of course, some debate about how costs are quantified in estimating deregulatory savings for the American people. But clearly, paring back these regulations has opened up a vast array of new opportunities for families, businesses, and entrepreneurs and paved the way for technological innovation for decades to come.

Unfortunately, taxpayers and consumers aren’t out of the woods yet. Crews notes that, “If it were a country, U.S. regulation would be the world’s eighth-largest economy (not counting the U.S. itself), ranking behind Italy and ahead of Brazil…The regulatory hidden ‘tax’ is equivalent to federal individual and corporate income tax receipts combined, which totaled $1.914 trillion in 2019 ($1.698 trillion in individual income tax revenues and $216 billion in corporate income tax revenues).” Regulatory hidden taxes are approaching $14,500 per household, and on average exceed every item on the household budget with the exception of housing.

And there’s plenty of indications that the Trump administration intends to ramp up regulations to “fix” perceived economic and social problems. President Trump recently signed an Executive Order prompting the Department of Commerce, Federal Communications Commission, and Federal Trade Commission to examine ways to hold online platforms legally liable for their users’ postings/content. This “reinterpretation” of Section 230 of the 1996 Communications Decency Act could cost the economy more than 400,000 jobs and tens of billions of dollars in lost tax revenues. Furthermore, the Trump administration continues to tether trade restrictions and tariffs to foreign companies doing business with American companies and households.

No single regulation, tariff, or restrictive legal clarification will be the death knell of the U.S. economy. But, the sum-total of federal rules can inflict death by one (or ten) thousand cuts. Absent policymakers identifying harmful restrictions and working to pare back unneeded rules, regulations will continue to consume a tenth of the economy and strangulate households. Fortunately, CEI has taken the initiative to identify America’s many regulatory issues and point out the hidden costs to, well, everyone. Everyone could stand to read the latest edition of “Ten Thousand Commandments” and learn a thing or two about America’s hidden tax system.