Congress should help small business have fewer fines


While the movers and shakers in Congress, always with an eye to November elections, are deciding higher-profile matters, a small but significant reform that deserves support is wending its way through the committee process in Congress.

HR5242 would give small-business owners a chance — for the first time — to correct unintentional paperwork mistakes rather than being forced to pay a fine.

This small reform would reduce the regulatory burden on small businesses only a little, but it would be helpful.

The Small Business Paperwork Amnesty Act would not eliminate requirements that businesses comply with federal regulations, but would give them a chance to correct inadvertent mistakes.

Businesses of all sizes are required to fill out a dizzying array of forms to document their compliance with various federal regulations.

The fines for making mistakes on such forms can range from $50 to thousands of dollars. HR5242 would simply permit first-time “offenders” to fix their mistakes without having to pony up.

Exceptions are made for violations that have the potential to cause serious harm to the public or if failure to impose a fine would impede detection of criminal activity.

In 2005 economist Mark Crain performed a study for the Small Business Administration that concluded that federal regulations cost Americans $1.1 trillion a year.

The bulk of the direct costs fall on small businesses. Since they have fewer employees than larger firms, the cost to businesses with fewer than 20 employees, Crain calculated, averages $7,647 per employee per year.

Large firms get attention from journalists and other observers, but small businesses provide the very heartbeat of the U.S. economy.
Reducing needless costs imposed on them by government could be the single most important thing government can do to keep the economy humming along.

This reform has been introduced since the Clinton years (President Clinton and many Democrats supported it) but has never made it to final passage.

When it returns from electioneering Congress should get this reform done.