Pick the Stupidest Regulation Contest: I Report, You Decide

I’ve conducted a handful of polls in the past four-plus years of writing this blog.

* Michael Ramirez won the contest for best political cartoonist.

* In the government-thuggery contest, readers overwhelmingly selected the organic farmer being harassed by local bureaucrats.

* I was surprised that Romney easily won the 2012 election poll, but even more surprised that Obama wasn’t that far behind Gary Johnson.

* For my poll on why (or if) people support the Second Amendment, my choice came in fourth place.

 * We got a wide range of responses in the poll about the guy who took revenge in a very unique way against local law enforcement.

Now let’s do another poll. Our contest today will be to select the worst example of the regulatory state running amok.

1. Our first option deals with the Orwellian Foreign Account Tax Compliance Act (FATCA), which seeks to impose bad American tax law on things that happen outside America’s borders.

The good news is that Obama has unified the world, just like he promised in his campaign. The bad news – from the U.S. perspective – is that the world is now united against this horrible piece of legislation.

Here’s some of what a law professor just wrote about FATCA for the Wall Street Journal Europe.

Beware the sledgehammer used to crack the nut. In this case, the nut is the U.S. government’s laudable goal of catching tax evaders. The sledgehammer is the overreaching effect of legislation that is alienating other countries and resulting in millions of U.S. citizens abroad being forced to either painfully reconsider their nationality, or face a lifetime of onerous bureaucracy, expense and privacy invasion. The legislation is Fatca, the Foreign Account Tax Compliance Act.

Ms. Graffy provides a very powerful example of why FATCA is an absurd extraterritorial application of bad U.S. law.

To appreciate its breathtaking scope along with America’s unique “citizen-based” tax practices, imagine this: You were born in California, moved to New York for education or work, fell in love, married and had children. Even though you have faithfully paid taxes in New York and haven’t lived in California for 25 years, suppose California law required that you also file your taxes there because you were born there. Though you may never have held a bank account in California, you must report all of your financial holdings to the State of California. Are you a signatory on your spouse’s account? Then you must declare his bank accounts too. Your children, now adults, have never been west of the Mississippi but they too must file their taxes in both California and New York and report any bank accounts they or their spouses may have because they are considered Californians by virtue of one parent’s birthplace.

Sounds utterly ridiculous, but FATCA applies these rules to American citizens in other nations – with predictably awful results.

Extrapolate that example to the six million U.S. citizens living around the globe. Many, if not most, don’t know about these requirements. Yet they face fines, penalties and interest for not complying—even if they owe no U.S. taxes, own no U.S. property, have no U.S. bank account and haven’t lived there in years—if ever. …Foreign financial institutions trying to avoid these new requirements have two alternatives: to drop American clients, or don’t invest in the U.S. Neither scenario benefits America.  …This infringement on the sovereignty of other nations has not gone down well abroad and has only served to reinforce the most negative stereotypes of America. …It forces honest people with affection for their ties to America to either keep quiet about their heritage, or spend potentially thousands of dollars a year to prove that they owe no U.S. taxes. Or, as is increasingly occurring, it forces them to give up their U.S. citizenship. The result is that the U.S. is turning millions of “good will” ambassadors into “bad will” ambassadors. Can any of this be good for America?

Of course it’s not good for America, but greedy politicians are perfectly happy to impose enormous costs on the private sector in exchange for trivially small amounts of additional revenue. And those projections of additional revenue almost surely won’t materialize because of Laffer-Curve effects on investment in the American economy, so even the politicians won’t come out ahead when the dust settles.

Maybe the crowd in Washington will even learn the right lesson and support Senator Rand Paul’s legislation to undo some of the worst parts of FATCA, but don’t hold your breath.

2. Here’s the second choice. I thought I had learned never to be surprised by examples of foolish government intervention, but even I did a double take when I learned that the federal bureaucracy was regulating rabbits in magic shows.

Not just regulating them, but even requiring disaster plans in case of calamities such as “Fire. Flood. Tornado. Air conditioning going out. Ice storm. Power failures”. I’m not joking. Here are some excerpts from a Washington Post report.

This summer, Marty the Magician got a letter from the U.S. government. It began with six ominous words: “Dear Members of Our Regulated Community . . .” Washington had questions about his rabbit. Again. …Hahne has an official U.S. government license. Not for the magic. For the rabbit. The Agriculture Department requires it, citing a decades-old law that was intended to regulate zoos and circuses. Today, the USDA also uses it to regulate much smaller “animal exhibitors,” even the humble one-bunny magician. That was what the letter was about. The government had a new rule. To keep his rabbit license, Hahne needed to write a rabbit disaster plan. …For Hahne, the saga has provided a lesson in one of Washington’s bad old habits — the tendency to pile new rules on top of old ones, with officials using good intentions and vague laws to expand the reach of the federal bureaucracy. …“Our country’s broke,” Hahne said. “And yet they have money and time to harass somebody about a rabbit.”

What if regulators are committing crimes against common sense?

Just in case you think this is merely a case of bureaucrats concocting silly rules from their comfortable perches in Washington, I’m sure you’ll be delighted to learn that our fearless public servants are venturing outside the beltway.

Hahne…has been doing magic shows full time for 27 years, on cruise ships and on land. That means he has experienced most of the troubles a magician can expect… But he did not expect the U.S. Department of Agriculture. “She said, ‘Show me your license.’ And I said, ‘License for . . .?’ ” Hahne recounted. This was after a 2005 show at a library in Monett, Mo. Among the crowd of parents and kids, there was a woman with a badge. A USDA inspector. “She said, ‘For your rabbit.’ ” Hahne was busted. He had to get a license or lose the rabbit. …Hahne has an official USDA license, No. 43-C-0269, for Casey — a three-pound Netherland dwarf rabbit with a look of near-fatal boredom. The rules require Hahne to pay $40 a year, take Casey to the vet and submit to surprise inspections of his home. Also, if Hahne plans to take the rabbit out of town for an extended period, he must submit an itinerary to the USDA. The 1966 law that started all of this was four pages long. Now, the USDA has 14 pages of regulations just for rabbits. …the law applies only to warmblooded animals. If Hahne were pulling an iguana out of his hat — no license required. Now, he needs both a license and a disaster plan.

I’ve complained about a bloated and overpaid government workforce, but I’ll redouble my efforts now that I know we have bureaucrats going to one-man magic shows to check people for licenses.

On the other hand, I’m surprised that rabbit rules only 14 pages of regulations? That’s pretty spartan compared to the 74,000 pages of rules for the tax code.

The good news – relatively speaking – is that rabbit regulations don’t threaten to drive investment and jobs from the U.S. economy. But for sheer stupidity on the part of government, can you think of a more pointless set of regulations?

3. Now let’s consider our final example, which manages to combine the nanny state with domestic protectionism with an attack on the First Amendment.

This trifecta of red tape insanity comes from Kentucky, where the local state-protected cartel of psychologists wants to stop a newspaper columnist from giving free advice.

Here are some of the details from the Associated Press.

John Rosemond has been dispensing parenting advice in his newspaper column since 1976, making him one of the longest-running syndicated columnists in the country. But some Kentucky authorities want to put him in a time out. In May, Kentucky’s attorney general and its Board of Examiners of Psychology told Rosemond his parenting column — which regularly offers old-school advice and shows little tolerance for any kind of parental coddling — amounts to the illegal practice of psychology. They want him to agree to a cease-and-desist order. In particular, they want Rosemond to stop identifying himself as a psychologist, because he is not a licensed psychologist in Kentucky.

To his credit, Mr. Rosemond is fighting back.

Rosemond, an author of 11 parenting books who has a master’s degree in psychology from Western Illinois and is a licensed psychologist in his home state of North Carolina, sees the board’s letter as an effort at censorship and is filing a lawsuit Tuesday in federal court seeking to bar the state from taking any action against him. …He is represented by the Arlington, Va.-based Institute for Justice, which has filed multiple lawsuits challenging what they see as overreach by government licensing boards. Institute for Justice lawyer Paul Sherman says that under Kentucky’s logic, columnists like Dear Abby and television personalities like Dr. Phil and Dr. Oz are breaking the law any time they offer advice, because the content is aired in Kentucky and meets the state’s broad definition of psychological advice.

And the newspaper that publishes his column also is standing up for the First Amendment.

Peter Baniak, editor of the Lexington Herald-Leader, which ran the column that prompted the psychology board’s cease-and-desist letter, said Monday that his paper has not been contacted by the board or the Kentucky attorney general, and that the paper intends to continue publishing the column. “I would find it troubling for a state board to suggest or think it has the ability to say what should or shouldn’t run in an advice column,” Baniak said.

By the way, if you watch this video, you’ll see that Rosemond’s home state of North Carolina also is guilty of trying to undermine the First Amendment as part of efforts to protect certain professions from competition.

Now it’s your turn to pick the most foolish example of regulation from this list.

By the way, just in case there are skeptics who think I’ve shared isolated examples and that regulation is generally beneficial, check out these staggering numbers.

• Americans spend 8.8 billion hours every year filling out government forms.
• The economy-wide cost of regulation is now $1.75 trillion.
• For every bureaucrat at a regulatory agency, 100 jobs are destroyed in the economy’s productive sector.
• Increased regulatory burdens since 1949 have reduced living standards by more than 70 percent.

So whether we’re looking at anecdotes or big-picture data, the message is the same. Red tape is strangling the productive sector of the economy.

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