“J. Robert McClure: Congress members should fight fed policies that hurt business, trade”
September 18, 2014
By J. Robert McClure
The entrepreneurial spirit is alive in Florida, despite federal tax and trade policies that discourage it. It is especially strong among recent immigrants who — like the Cuban refugees before them — fled countries such as Venezuela, where an authoritarian government seems bent on destroying the private-sector economy.
Unfortunately, despite Florida excellent business climate, starting a business in the state — or anywhere else in the U.S. — is no longer as easy as it once was. Instead, for the prudent entrepreneur, the first steps nowadays are to hire a lawyer and an accountant.
Why a lawyer? Legal advice can help a startup business through a regulatory mine field replete with hazards ranging from zoning restrictions to licensure provisions, including some blatantly designed to discourage competitors from entering a field of business.
Then there’s compliance with the complex federal, state and local rules and regulations governing so many facets of their business. With Florida widely portrayed as “a judicial hellhole” where businesses are constantly exposed to costly litigation, the state is not a good place to be sued. So, hiring a lawyer can help.
Why an accountant? Because as of 2013, the federal tax code had ballooned to 73,954 pages, according to a CNN report. Even the savviest CPAs have trouble understanding all of it. Mistakes can trigger an IRS audit. Even if you emerge from the audit relatively unscathed by fees and fines, you lose time and money.
Few steps in Washington would do more than tax reform to encourage the formation of new businesses nationwide and the prosperity of existing ones. However, that’s not the direction Congress is headed.
Indeed, as author Peter Schweizer pointed out in his well-documented 2013 exposé of crony capitalism, Extortion: How Politicians Extract Your Money, Buy Votes, and Line Their Own Pockets, keeping the tax code big and complex lends itself to granting political favors, regardless which party is in charge.
The same goes for trade barriers. Although most economists tout the advantages of freer trade, many obstacles remain in the form of tariffs and import quotas. The result is that consumers pay more for imported goods — and that other countries buy fewer products and services from the U.S. than they otherwise might buy.
For Florida, the impact of trade barriers on job creation is arguably even worse. This state is a natural trading partner with Latin America and the Caribbean. The state’s seaports and airports are important job creators.
Freer trade not only would create jobs in Florida, but it could also improve the economies of Florida’s trading partners, thereby contributing to the political stability and economic prosperity of those nations.
Alas, problems with the mind-boggling federal tax code and with counterproductive trade barriers such as the import quotas on sugar can’t be solved in Tallahassee. The best any state can do is to avoid emulating Washington’s bad policies.
Meanwhile, states are essentially bystanders when it comes to the key issues affecting foreign trade. States may improve the seaports and airports through which trade flows, and Florida is aggressively doing so because of the widening of the Panama Canal.
In the end, though, Washington needs to act — and that’s where Florida’s large congressional delegation has a role. Simplifying the tax code and relaxing trade barriers are issues both political parties should be able to agree on.
The challenge is in the phrase “Washington needs to act.” Unfortunately, only Washington can fix the federal tax code and lower the trade barriers. Until Washington acts, Florida should continue to do the best it can with the hand it has been dealt.
Dr. J. Robert McClure is President/CEO of The James Madison Institute, a non-partisan think tank based in Tallahassee. Contact him at email@example.com or follow him on Twitter at @DrBobMcClure. Column courtesy of Context Florida.