Memo To Business: We Want You To Hire, So We’re Putting More Burdens On You

According to this article, small businesses are reluctant to hire because of the very real prospect of additional tax and regulatory burdens they will have to bear.  The possibility that Obamacare will make them responsible for their employees’ health insurance expenses is but one example of the tax and regulatory burdens that may be on the horizon.

Part of this is the regime uncertainty that Robert Higgs has emphasized over the years, but partly it is just the realistic expectation that government plans to increase tax and regulatory burdens are in the works, at the federal, state, and local levels.

One reason we are in for a slow recovery is that the government’s recovery efforts are hindering the recovery, not helping.  As the economy turns around, any resources going toward government are coming out of the private sector, and the additional tax and regulatory burdens are slowing job growth.  Less than a year ago congress passed a $787 billion stimulus package to try to turn the flailing economy around, but the bulk of that money went to government.

It appears that government’s economic recovery strategy is to minimize the impact of the recession on government, while placing additional burdens on the private sector.  Our elected officials must be thinking that the voters won’t notice this, or if they notice, they won’t be able to do anything about it.  But with elections coming up in November, I’m expecting (or maybe just hoping for) a backlash.

Randall G. Holcombe is Research Fellow at the Independent Institute and DeVoe Moore Professor of Economics at Florida State University. His Independent books include Housing America: Building Out of a Crisis (edited with Benjamin Powell); and Writing Off Ideas: Taxation, Foundations, and Philanthropy in America .
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