Job-Killing Madness | Richard W. Rahn | Cato Institute: Commentary

Job-Killing Madness | Richard W. Rahn | Cato Institute: Commentary: 'Assume for moment you are the head of a small community bank. You have two-dozen employees. The government then sends you many thousands of pages of new regulations. Who in your bank is going to be able to read and understand all of this and then set up the procedures for complying with all the new regulations? The government says hire lawyers and accountants to give the necessary information and set up the compliance systems. But lawyers and accountants are very expensive, and your bank may not be able to afford them and still make a profit. So the bank is left with the choice of going out of business or selling out to a larger bank. This, in turn, leads to more concentration and less competition in the banking industry and adds to the problem of “too big to fail.” As the costs of regulation grow, banks are forced to charge higher and higher fees in order to stay in business, and they make fewer loans, which means fewer trucks and truck drivers, and less of everything else, including jobs.'

Generally community banks didn't have problems and large banks did so the regulation is encouraging more of types of banks that had problems and discouraging the types of banks that didn't have problems!

'In a mindlessly stupid attempt to try to get a few billion more dollars in tax revenue, the government has put a large share of foreign investment that comes into the U.S. and millions of the resulting jobs at risk. The new rules (including the Foreign Accounts Tax Compliance Act) are so vague, complex and costly to administer that foreign financial institutions are ceasing to allow Americans to open accounts and are refusing to invest in the United States.'

'“Foreign investment in the U.S. amounts to $21 trillion, and $11 trillion of this is invested in U.S. securities. A KPMG survey indicates only 36 percent of financial institutions will comply with [the tax compliance act], leaving 64 percent still considering divesting out of U.S. securities. If even a fraction of those foreign investors divest, the loss to the U.S. would be in the trillions of dollars. This, at a time when the U.S. economy desperately needs more foreign investment, not less.”'

'Rather than focusing on the taxpayers who may not have paid the tax due, Justice decided to go after the foreign banks and their executives with both civil and criminal charges — even though these banks were totally compliant with their own country’s laws and have no U.S operations.'

'Extending U.S. law to foreign countries and institutions is dangerous because it puts all U.S. citizens and businesses at risk. Foreign governments can now argue that their laws should apply in the United States. If someone publishes an article or cartoon in the U.S. that a Muslim government finds offensive, should that government be able to arrest that person in this country or when that person travels outside the U.S.? If a foreign visitor from a country with strict gun laws legally purchases a gun in the United States but does not take it back to his home country, should his country be able to arrest him and the U.S. retailer who sold the gun?'