Regulation is often best understood as a tool used by Big Business to keep out competition. This collusion of Big Business and Big Government is always destructive, always unfair, and often illegal. The Institute for Justice levels all three charges against the tax-preparation rules issued by Obama’s IRS.
Kelly Jane Torrance at the Weekly Standard explains the suit and thelaw:
H&R Block and Jackson Hewitt, by far the two largest tax preparers, benefit from this rule. Bloomberg reported at the time:
“We think if the focus shifts to who has the highest standards, that’s good for us,” said Kathryn Fulton, a lobbyist in Washington for Kansas City-based H&R Block. The company filed 21.1 million tax returns last year, or about 15.8 percent of all returns. That’s just off the top of my head.
UBS, advising clients, saw the regulations as a reason to buy H&R Block stock, I reported two years ago:
Got that: “add barriers to entry.” That’s at the heart of what I call the “Overhead Smash.” Regulations add to overhead, thus driving out small competitors, and preventing new competitors from entering.
But again, H&R Block isn’t just a passive beneficiary of this regulation — it was an active supporter. In July, once the IRS announced it was considering these rules, H&R Block hired the Podesta Group to lobby on the matter. The Podesta Group was co-founded by John Podesta, who later became an Obama confidant and his transition director. Podesta Group is currently run by Tony Podesta, the leading lobbyist-bundler in the country, who has raised, together with his lobbyist wife, well over half a million for Democrats this election.
But wait, it gets better. The IRS official in charge of writing these rules: Mark Ernst, former CEO of H&R Block. As I wrote at the time:
With Ernst in mind, recall Barack Obama’s campaign pledge: “No political appointees in an Obama administration will be permitted to work on regulations or contracts directly and substantially related to their prior employer for two years.”
This campaign pledge manifested itself in an executive order requiring “every appointee in every executive agency” to pledge, “I will not for a period of 2 years from the date of my appointment participate in any particular matter involving specific parties that is directly and substantially related to my former employer or former clients, including regulations and contracts.”
Ernst obviously didn’t follow these rules, but the IRS tells me that Ernst is not covered by these rules. “Mark Ernst is a civil servant at the IRS; he is not a political appointee,” according to an e-mail IRS statement by an agency spokesman.
Because the media has so thoroughly bought into The Big Myth that Big Business and Big Government are rivals — that regulation is primarily about curbing the power of corporate America — expect plenty of media to note H&R Block’s support for the regs as an oddity. An “interesting twist.”
But it’s the norm. Here are some examples of Big Business supporting regulation of itself and benefitting from it:
- Mattel, the world’s largest toymaker, supported strict new federal toy-safety regulations
- Philip Morris, the world’s largest tobacco company, supported strict new federal tobacco regulation.
- Wal-Mart, the nation’s largest non-government employer, supported a higher minimum wage and an employer-mandate in health insurance.
- GE supported strict efficiency standards on light-bulbs.
- Nike supported climate-change rules that crush its smaller competitors who actually make things in the U.S.
- Big food producers supported new food-safety regulations.
- The financial planning industry group called for more federal regulation of financial planning.
- Hedge-fund giant Jim Chanos advocated federal registration of hedge funds.
- The American Bankers Association applauded new federal credit-card regulations.
- The big trucking companies supported new trucking regulations.
