“America is another name for opportunity,” wrote Ralph Waldo Emerson.
For generations, the United States has been a fertile ground for economic growth and opportunity, attracting the best and brightest from all over the world. From the Ford Model “T” and Coca-Cola to the iPod and online successes like Google and Amazon, Americans have made innovative ideas accessible to the masses, creating new jobs and wealth for millions.
Unfortunately, Congress has spent the last several decades decreasing the American entrepreneur’s ability to compete in today’s global marketplace with higher taxes, new regulations and ever-growing piles of bureaucratic red tape.
One example of this growing problem is the Sarbanes-Oxley legislation enacted in 2002 in an effort to tighten the reigns on major corporations caught in accounting scandals. This was a typical congressional knee-jerk overreaction and now thousands of smaller companies face heavy financial burdens that are stifling their ability to create jobs and grow our economy.
As The Wall Street Journal has noted, in 2000 before Sarbanes-Oxley “nine out of every 10 dollars raised by foreign companies through new stock offerings were done in New York … But by 2005, the reverse was true: Nine of every 10 dollars were raised through new company listings in London or Luxembourg.”
The Journal’s James Freeman recently wrote that Sarbanes-Oxley regulations can increase the costs of a company going public on the NYSE by $5 million.
Legislation like this is always passed in the name of helping the “little guy,” but as former Massachusetts Gov. Mitt Romney has said: “You don’t help the wage-earner by attacking the wage-payer.”
Washington cannot continue to attack businesses without eventually hurting the millions of Americans employed by them and encouraging companies to take jobs overseas.
Government regulations cost Americans $1.1 trillion in 2004, or some $10,172 per household, according to a study for the Small Business Administration.
Last year, even as taxes and mandates on business continued to skyrocket, Senate Democrats refused to permanently ban Internet taxation.
Even more troubling is the prospect of a Democrat majority in Congress backed by an Obama presidency. Having spent most of my life as a small businessman, I fear this would usher in a whole new era of business-crippling legislation.
For starters, Sen. Barack Obama has said he supports the Employee Free Choice Act, which, hypocritically, denies employees the freedom of a secret ballot vote to join a union.
This would be especially detrimental to small businesses struggling to get off the ground, and severely restrict job creation. According to the U.S. Labor Department, from 2002 to 2007, jobs boomed in states that guarantee citizens the right to work outside of union membership, growing employment by an average of 9.6 percent. But in Michigan, where workers are forced to join unions, jobs declined by 5.2 percent during the same period.
On top of that, Obama promises to further discourage job creation by raising the federal minimum wage and forcing employers to provide benefits he deems necessary. He’s called for increasing taxes on income, dividends and Social Security.
Although he’s never run a business himself, Obama will have the audacity to tell hard-working Americans how to run theirs — revoking their freedom to do what they think is best.
Studies show that lowering taxes on labor or capital — or both — lead to higher levels of economic activity. Under Ronald Reagan, America became known as the corporate tax leader — cutting federal rates from 46 percent to 34 percent in 1986.
Unfortunately, over the last decade America has stood still while Europe has moved aggressively to attract business, and today our corporate tax rate is more than 10 points higher than the European average of 24.2 percent. U.S. businesses deserve a chance to compete on a level playing field.
This is all a far cry from what the Founders initially envisioned would be the American experience. They knew the strength of the American economy would come from the hard work and ingenuity of its people.
Entrepreneurs spur fresh ideas, additional job opportunities and innovative products and services. And they knew that government had to get out of the way of entrepreneurs for our nation to prosper.
In his first inaugural address, Thomas Jefferson said: “Still one thing more, fellow-citizens — a wise and frugal government, which shall restrain men from injuring one another, shall leave them otherwise free to regulate their own pursuits of industry and improvement, and shall not take from the mouth of labor the bread it has earned. This is the sum of good government …”
If there is anything to be learned from our current economic crisis, it is that less government interference is needed, not more. With the explosion of the Internet, a new frontier of American opportunity has emerged, along with the liberal impulse to regulate it.
Congress should learn from past blunders and take a hands-off approach to online commerce, while at the same time working to undo the economic damage caused in other industries by rampant regulation and over-taxation.
When entrepreneurs are given the chance to succeed under free market principles, we all win. Sometimes less really is more.
Sen. Jim DeMint is a Republican from South Carolina.
