Wednesday, December 8, 2010

Study: Cost of Compliance on the Rise

The cost of regulatory compliance continues to inflate for Corporate America, according to a recent study, with some sectors, such as manufacturing, paying a much higher price than others.
The report, “The Impact of Regulatory Costs on Small Firms,” from the Small Business Administration, also found that small business spend a disproportionately higher percentage on compliance than mid-sized or large ones.
“Under any scenario the cost burden of regulations is rising,” says Mark Crain, co-author of the study, and a professor at Lafayette College. He notes that the cost of regulatory compliance has risen every time since the SBA first started tracking the statistic in the 1990s. The SBA study looks at the overall cost of federal regulations divided into four categories: economic; environmental; tax compliance; and occupational safety and health, and homeland security.
In total, the compliance cost for all federal regulations in 2008 was an estimated $1.75 trillion—an amount equal to 14 percent of the U.S. national income. The cost burden on businesses was pegged at about $970 billion. Individuals and state and local governments pay the balance. Those numbers are a 3 percent increase from the estimated $1.7 trillion cost (in 2009 dollars) on companies in 2004, the last year the SBA analyzed the data.
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