Taxation to Regulation: The Rise to Economic Enemy #1

By Cameron Gabriel and David Wilhelmsen

In 1980 the average federal tax revenue stood at $3,910 per capita-- $10,347 per
capita in 2010 dollars.1 Meanwhile in 2010 the average federal tax revenue moved to
$15,219 per capita.2 Average per capita tax revenue, then, rose by roughly one third
during this period. High taxes represented a substantial issue for Americans in 1980 and
continue to put a strain on them today. Nonetheless, since that time, the cost imposed by
government regulations has grown to parallel or even exceed the burden of direct
taxation.
The most notable expert in this field is Clyde Wayne Crews Jr., who tells us: I
calculate that the cost of federal economic, environmental and health and safety
regulation is around $1.86 trillion annually, based largely upon government data.3 That
figure exceeds the amount spent on health care, food, transportation, entertainment, and
clothing combined.4
In addition, it has doubled since the end of Reagans presidency. A 1988 report by
the Regulatory Information Service Center, and supported by Crews, estimated the cost
of regulation to be around $473 billion dollars (or 951.2 billion in 2014 dollars).5 We
already stated that the current cost of federal regulation is about $1.86 trillion annually.
Thus, the cost of federal regulation on the economy has doubled in just the past two and a

1 U.S. Government Revenue, Government Revenue Breakdown (2010).
http://www.usgovernmentrevenue.com/breakdown_1980USdt_15ds1n, (viewed
07/09/2014).
2
U.S. Government Revenue, Government Revenue Breakdown (1980).
http://www.usgovernmentrevenue.com/breakdown_2010USdt_15ds1n
3
Clyde Wayne Crews, The Cure for Regulation Destabilization. Forbes Magazine,
http://www.forbes.com/sites/waynecrews/2014/06/19/the-cure-for-regulationdestabilization/, (viewed 07/09/2014).
4
Crews, Forbes, http://www.forbes.com/sites/waynecrews/2014/06/19/the-cure-forregulation-destabilization/, (viewed 07/09/2014).
5
Clyde Wayne Crews, Tip of the Costberg. Competitive Enterprise Institute.
http://www.scribd.com/doc/103172296/Tip-of-the-Costberg-On-the-Invalidity-of-AllCost-of-Regulation-Estimates-and-the-Need-to-Compile-Them-Anyway, pg. 61 (viewed
on 07/09/2014).

half decades. What is more, Crews estimates that: Federal regulations added over the
past fifty years have reduced real output growth by about two percentage points on
average over the period 1949-2005. That reduction in the growth rate has led to an
accumulated reduction in GDP of about $38.8 trillion as of the end of 20116 U.S.
economic output, then, would be almost three times its current amount were it not for the
effects of these burdensome regulations.
Given this alarming information, one might expect our leaders to slow the growth
of federal regulation. President Obama, however, has only accelerated this regulatory
mutation. The Heritage Foundation notes that Obama has aggressively exploited
regulation to achieve his policy agenda: issuing 157 new major rules at a cost to
Americans approaching $73 billion annually. In 2013 alone, the Administration imposed
26 new major rules.7 The following chart illustrates the discrepancy between Obama and
his predecessor, President Bush, in terms of the number of federal regulations issued per
year:

6
Costberg, Crews, pg. 31.
7 James L. Gattuso and Diane Katz, Red Tape Rising: Five Years of Regulatory
Expansion. Heritage Foundation, http://www.heritage.org/research/ reports/2014/03/redtape-rising-five-years-of-regulatory-expansion, (viewed 07/09/2014).