To create jobs, peel off the regulatory parasite


Shortly after taking office, Gov. Brian Sandoval signed an order suspending any new executive branch regulations until 2012. He said this will send a signal that the state is business-friendly.

He also asked state agencies to review regulations and rescind any that harm businesses. He made an exception for regulation protecting health and safety, which, frankly, is a large enough caveat to sail an aircraft carrier through.

Sandoval appears to recognize it is not merely the laws and taxes a state has on the books, but the deeds of the regulatory agencies that can stymie business.

It is much the same with our federal government, as George Will recently wrote. Congress doesn't pass laws regulating things any more, it abdicates its authority by creating bureaucracies in the executive branch that write the detailed restrictions, whether it's the EPA, FCC, USDA, SEC or some other acronym agency.

"Too many 'laws,' " Will writes, "actually are little more than pious sentiments endorsing social goals -- environmental, educational, etc. -- the meanings of which are later defined by executive-branch rule-making.

"In creating faux laws, the national legislature often creates legislators in the executive branch, making a mockery of the separation of powers."

Even President Obama horned into the act this past week, recognizing in an op-ed published in The Wall Street Journal, "Sometimes, those rules have gotten out of balance, placing unreasonable burdens on business -- burdens that have stifled innovation and have had a chilling effect on growth and jobs."

The president signed an order mandating "a government-wide review of the rules already on the books to remove outdated regulations that stifle job creation and make our economy less competitive."

After the governor signed his order, the Review-Journal editorialized approvingly.

"A campaign to help existing Nevada businesses cut through red tape and restrain overzealous regulators should go hand-in-hand with work to lure new businesses to the Silver State," we said in a Jan. 6 editorial.

Well, a couple of businessmen sent us letters detailing what it is like in the real world of nickel-and-dime taxes, fees and fines -- providing anecdotal evidence of profits being undercut.

Construction company owner and operator Ed McSwain described his 18 years of experience with state and local government bureaucracy: "I am constantly forced to pay, pay, pay or wait, wait, wait."

McSwain wrote about waiting four months for a Fire Department inspection before he went to the Clark County Commission to complain. It still took another two weeks for the inspectors to show up. Meanwhile, he was paying rent and wages to his idle employees.

He also told of applying for a permit to run a natural gas line across a street. It was denied with no valid reason given. Two weeks later, with another $150 submission fee, the plan was approved.

McSwain told of a relative who was basically entrapped by a county employee into making a minor zoning infraction, which drew a fine. This was followed the next day by a health inspection and fine, and the next day by a fire inspection and fine. The business is planning to move to Texas.

Mike Bryant, who operated an outdoor furniture store here in the 1990s, said he finally threw in the towel after confronting profit-killing government requirements he called "extortion."

Before he opened the doors to his business he had to pay for state and city business licenses and incorporation expenses.

"Then you have your payroll taxes even if you have no payroll expense," Bryant writes. "I worked for the first 18 months without a paycheck but I still had to pay the 'minimum fee' for S.I.I.S. (workman's compensation) and the state unemployment tax. Neither of which I was eligible to collect as the owner of the business, yet they used my wage to compute the tax liability."

He also had to pay both the employee and employer share for Social Security and Medicare taxes.

Then there was the state auditor who spent three days going over his books to find he had purchased some "Sale" signs in another state for $25. "She smiled and informed me that I was liable for the sales tax to the state on those items and promptly informed me that I owed $1.69 plus late fees of $250!"

Bryant concluded, "If someone were to ask me my opinion regarding setting up a business in Nevada, it would be 'fa-getta-bout-it.' "

The regulatory bureaucracy may be the only parasite that sucks its host dry and then complains it is being starved.

Thomas Mitchell is senior opinion editor of the Review-Journal. He may be contacted at (702) 383-0261 or via e-mail at tmitchell@ reviewjournal.com. Read his blog at lvrj.com/blogs/mitchell.

 

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